If the M1 Multiplier Is 3 and the Fed Engages

question 26

Multiple Choice

If the M1 multiplier is 3 and the Fed engages in open-market sales in the amount of $3 billion, then M1 will

• A)increase by $1 billion.
• B)decline by $1 billion.
• C)decline by $9 billion.
• D)increase by $9 billion.

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