When the monetary base increases by $2 billion, the quantity of money increases by $10 billion. Thus, the money multiplier equals
A) 0.2.
B) 5.
C) 20.0.
D) 0.5.

Name: When the monetary base increases by $2 billion, the quantity of money increases by $10 billion. Thus, the money multiplier equals A) 0.2. B) 5. C) 20.0. D) 0.5.
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Question

Quizplus · Accepted Answer

The money multiplier is calculated by dividing the change in the quantity of money by the change in the monetary base. In this case, $10 billion / $2 billion = 5.

When the Monetary Base Increases by $2 Billion, the Quantity