If an increase in the monetary base of $8 billion increases the quantity of money by $64 billion, then the money multiplier is equal to
A) $64 billion.
B) 8.
C) $8 billion.
D) 1/8.

Question

Quizplus · Accepted Answer

The money multiplier is calculated as the ratio of the increase in the quantity of money to the increase in the monetary base, which in this case is $64 billion / $8 billion = 8.

If an Increase in the Monetary Base of $8 Billion