If the M2 multiplier is 8.3, how much would the Fed need to add to the monetary base in order to increase the M2 measure of the money supply by $830 million?
A)$10 million
B)$100 million
C)$1 billion
D)$6.889 billion

Question

Quizplus · Accepted Answer

To find the amount the Fed needs to add to the monetary base, divide the desired increase in M2 ($830 million) by the M2 multiplier (8.3). $830 million / 8.3 = $100 million.

If the M2 Multiplier Is 8