If the monetary base equals $400 billion and the money multiplier equals 2, then the money supply equals:
A) $200 billion.
B) $400 billion.
C) $800 billion.
D) $1,000 billion.

Question

Quizplus · Accepted Answer

The formula for calculating the money supply is: 
Money supply = Monetary base x Money multiplier

Using the values given in the question: 
Money supply = $400 billion x 2 
Money supply = $800 billion

If the Monetary Base Equals $400 Billion and the Money