Ask Question
28 July, 05:07

Suppose an increase in the monetary base of $3 00,000 increases the quantity of money by $600,000. Calculate the money multiplier.

+4
Answers (1)
  1. 28 July, 09:05
    0
    Calculate the money multiplier.

    MM : 2

    Explanation:

    The money multiplier is the number of times that the monetary base is used in the economy, it's calculated as follows:

    Money Supply = Monetary Base * Money Multiplier

    Money Multiplier = Money Supply / Monetary Base

    Money Multiplier = 600 / 300 = 2

    The Money Supply is affected by the reserve of money that the banks keeps as required reserves and excess reserves, so, total reserves, it means less money to spent or lent.
Know the Answer?
Not Sure About the Answer?
Get an answer to your question ✅ “Suppose an increase in the monetary base of $3 00,000 increases the quantity of money by $600,000. Calculate the money multiplier. ...” in 📙 Business if there is no answer or all answers are wrong, use a search bar and try to find the answer among similar questions.
Search for Other Answers