If an Increase in the Monetary Base of $8 Billion

question 83

Multiple Choice

If an increase in the monetary base of $8 billion increases the quantity of money by $64 billion, then the money multiplier is equal to .

• A) 1/8
• B) $8 billion
• C) 8
• D) $64 billion

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Definitions:

Indices

Market indicators or benchmarks that track the performance of a specific basket of assets or group of stocks, representing a specific sector, market, or economy.

DJIA

The Dow Jones Industrial Average, a stock market index that measures the stock performance of 30 large companies listed on stock exchanges in the United States.

Stock Index Futures

Futures contracts where the underlying asset is a stock index, allowing investors to speculate on the future value of the index.

Transactions Costs

Expenses incurred when buying or selling securities, which can include brokerage fees, commissions, and other charges.