Fed buy $300,000 worth of bonds, if the
money multiplier is 3 and want to increase the money supply by $900,000. As the formula of the money multiplier is change in total money supply upon change in total monetary base.
The multiplier effect is a term used in
economics to describe the proportional
increase or decrease in final revenue that
occurs as a result of a capital injection or
withdrawal. In effect, it calculates the influence of a change in economic activity, such as investment or spending, on a company's total economic output.
Fed buy $300,000 worth of bonds, if the
money multiplier is 3 and want to increase the money supply by $900,000. As the formula of the money multiplier is change in total money supply upon change in total monetary base. Thus, Fed buys $300,000 worth of bonds.
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Complete question: If the money multiplier is 3 and the Fed wants to increase the money supply by $900,000, it could Group of answer choices.
