The number by which a change in the monetary base is multiplied to find the resulting change in the quantity of money is called the
A)desired reserve ratio.
B)money multiplier.
C)currency multiplier.
D)currency drain.
E)open market operation.

Question

Quizplus · Accepted Answer

The money multiplier is the number by which a change in the monetary base is multiplied to find the resulting change in the quantity of money. The desired reserve ratio is the ratio of reserves to deposits that banks would prefer to hold. The currency multiplier and currency drain are not commonly used terms in monetary policy. Open market operation refers to the buying and selling of government securities by the central bank to influence the monetary base and interest rates.

The Number by Which a Change in the Monetary Base