Question assume that the money base is increased by 2, Ask an Expert

Economics

Question: Assume that the money base is increased by $2 billion dollars, that the currency demand deposit ratio is 5%, that the reserve requirement is 10%, and that the excess reserve demand deposit ratio is 40%.

The simple money creation multiplier suggests that the money supply will

a) increase or

b) decrease by _______ billion dollars.

While the more complete multiplier suggests it will

A) increase or

B) decrease by ______ billion dollars?

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Microeconomics, Economics

Category:- Microeconomics
Reference No.:- M92597749

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