Decisions of ________ determine the magnitude of the monetary multiplier.
A)only the Fed
B)only the public
C)both the Fed and the public
D)neither the Fed nor the public
E)the Fed and the U.S.Congress

Question

Quizplus · Accepted Answer

The actions of both the Fed and the public determine the magnitude of the monetary multiplier. The Fed's decisions on the level of reserves and interest rates affect the quantity of money that banks can lend out, while the public's decisions on borrowing and spending affect the amount of money that flows through the economy. Therefore, both parties play a role in determining the overall effect of monetary policy on the economy.

Decisions of ________ Determine the Magnitude of the Monetary Multiplier