Answer:
increase by $9 billion.
Explanation:
If the M1 multiplier is 3 and the Fed engages in open-market sales in the amount of $3 billion, then M1 will increase by $9 billion.
The ratio of money supply to monetary base is called the money multiplier.
The money-multiplier process explains how an increase in the monetary base causes the money supply to increase by a multiplied amount
Hence in the Scenario, the money supply 9 billion because $3 billion (monetary base) x 3 (money multiplier) = $9billion
