The monetary multiplier is 3 and the change in the monetary base is $100,000.How much will the quantity of money increase?
A)$300,000
B)$200,000
C)$100,000
D)$70,000
E)$33,333

Question

Quizplus · Accepted Answer

The monetary multiplier indicates how much the money supply will increase for a given change in the monetary base. With a multiplier of 3 and a change in the monetary base of $100,000, the increase in the quantity of money is 3 times $100,000, which equals $300,000.

The Monetary Multiplier Is 3 and the Change in the Monetary