When calculating the extent to which changes in the money supply will change nominal GDP, we use the money multiplier instead of the spending multiplier.

Question

Quizplus · Accepted Answer

The money multiplier is used to determine how changes in the monetary base will affect the total money supply, not directly how changes in the money supply will change nominal GDP. The spending (or fiscal) multiplier is more directly related to changes in GDP through changes in spending.

When Calculating the Extent to Which Changes in the Money