If the Banking System's Money Multiplier Is 4, Then a $2,000

question 151

Multiple Choice

If the banking system's money multiplier is 4, then a $2,000 increase in checkable deposits when banks hold excess reserves will result in which of the following events?

• A) The money supply will decrease
• B) The money supply will not change.
• C) The money supply will increase by exactly $8,000.
• D) The money supply will increase by more than $8,000.
• E) The money supply will increase by less than $8,000.

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