If the banking system's money multiplier is 4, then a $2,000 increase in checkable deposits when banks hold excess reserves will result in which of the following events?
A) The money supply will decrease
B) The money supply will not change.
C) The money supply will increase by exactly $8,000.
D) The money supply will increase by more than $8,000.
E) The money supply will increase by less than $8,000.

Question

Quizplus · Accepted Answer

The Answer of If the banking system's money multiplier is 4, then a $2,000 increase in checkable deposits when banks hold excess reserves will result in which of the following events?
A) The money supply will decrease
B) The money supply will not change.
C) The money supply will increase by exactly $8,000.
D) The money supply will increase by more than $8,000.
E) The money supply will increase by less than $8,000.

If the Banking System's Money Multiplier Is 4, Then a $2,000