If the money multiplier is 2.4 and the Fed buys $8 million in securities on the open market, transaction deposits could potentially

Name: If the money multiplier is 2.4 and the Fed buys $8 million in securities on the open market, transaction deposits could potentially
Brand: Quizplus
Rating: 4.8 (51 reviews)

Question

Quizplus · Accepted Answer

The formula for calculating the potential increase in transaction deposits is:
Potential Increase in Transaction Deposits = Increase in Reserves x Money Multiplier
= $8 million x 2.4
= $19.2 million

If the Money Multiplier Is 2