If the required reserve ratio is 10% and the Fed conducts an open market purchase of $100, what is the maximum possible change in the money supply?

Question

Quizplus · Accepted Answer

The maximum possible change in the money supply is determined by the money multiplier, which is equal to 1/required reserve ratio. In this case, the maximum possible change in the money supply is:
1/0.1 x $100 = $1,000
Therefore, the correct answer is B).

If the Required Reserve Ratio Is 10% and the Fed