If the Money Multiplier Is 2 and the Fed Buys

question 9

Multiple Choice

If the money multiplier is 2 and the Fed buys $50,000 worth of bonds, what happens to the money supply?

• A)it increases by $100,000
• B)it increases by $150,000
• C)it decreases by $100,000
• D)it decreases by $150,000

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Definitions:

Rhetoric

The art of effective or persuasive speaking or writing, often used to influence or shape public opinion.

Intelligence

The ability to understand and solve problems; an important leadership trait or quality involving discernment, comprehension, and judgment; capacity to understand information, formulate strategies, and make good decisions.

Servant Leader

A person devoted to others or to a cause or creed. A servant leader advances the interest of others, often at personal sacrifice. The essential component of servant leadership is the element of caring.

Executive Suite

The top-tier management officials within an organization, typically including positions like CEO, CFO, and other chief officers.