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Which of the Following Is True

Question 36

Multiple Choice

Which of the following is true?


A) The multiplier is under the Fed's direct control and is fairly stable or predictable, especially in the short run.
B) If the Fed can control the supply of reserves in the banking system, it can precisely control the money supply in the short run.
C) Over the longer run (3-6 months) , as the fluctuations in the multiplier tend to offset one another, the Fed's ability to predict the multiplier, and thus control the money supply, improves considerably.
D) When excess reserves are taken into consideration, the multiplier increases.

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