If Federal Reserve Float Increases by $2 Billion, the Monetary

question 28

Multiple Choice

If Federal Reserve float increases by $2 billion, the monetary base will increase by

• A)$2 billion.
• B)$2 billion times the money multiplier.
• C)from zero to $2 billion, depending on the fraction of the increase in float that banks hold as excess reserves.
• D)zero; fluctuations in float have no effect on the base.

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Definitions:

Merchandise Returns

Goods returned by the buyer to the seller usually because of defects or dissatisfaction, affecting the seller's revenue.