If the Fed Decreases the Monetary Base by $100 Million

question 25

Multiple Choice

If the Fed decreases the monetary base by $100 million and the money multiplier is 4,M1 will

• A)rise by $400 million.
• B)fall by $400 million.
• C)rise by $25 million.
• D)fall by $25 million.

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Definitions:

Pituitary Gland

A small gland at the base of the brain crucial for controlling various hormonal functions in the body.

Thyroid Gland

An endocrine gland located in the neck, producing hormones that regulate metabolism, energy, and overall growth and development.

Pineal Gland

A small endocrine gland in the vertebrate brain that produces and secretes the hormone melatonin, regulating sleep patterns.

Adrenal Gland

A pair of endocrine glands that sit above the kidneys and produce hormones such as adrenaline and cortisol, which help control stress and other bodily functions.