The money multiplier is
A) the amount by which a change in the quantity of money is multiplied to determine the change in the monetary base.
B) the amount by which a change in the monetary base is multiplied to determine the change in the quantity of money.
C) equal to bank reserves divided by the change in the monetary base.
D) equal to bank reserves divided by the change the quantity of money.

Question

Quizplus · Accepted Answer

The money multiplier refers to how an initial change in the monetary base leads to a greater change in the total money supply. It is the ratio of the change in the quantity of money to the change in the monetary base.

The Money Multiplier Is