The Money Multiplier Is

question 133

Multiple Choice

The money multiplier is

• A)the amount by which a change in the monetary base is multiplied to determine the change in the quantity of money.
• B)the amount by which a change in the quantity of money is multiplied to determine the change in the monetary base.
• C)equal to bank reserves divided by the change the quantity of money.
• D)equal to bank reserves divided by the change in the monetary base.

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Definitions:

Congress

The national legislative body of a country, particularly in the United States, consisting of the Senate and the House of Representatives.

Federal Reserve

The central banking system of the United States, responsible for monetary policy, regulating banks, and ensuring financial stability.

Commercial Banks

Commercial banks are financial institutions that accept deposits, offer checking account services, and make loans to individuals and businesses.

Reserve Requirements

Regulations set by central banks determining the minimum amount of reserves that must be held by a commercial bank.