Multiple Choice
If Federal Reserve float increases by $2 billion, the monetary base will increase by
A) $2 billion.
B) $2 billion times the money multiplier.
C) from zero to $2 billion, depending on the fraction of the increase in float that banks hold as excess reserves.
D) zero; fluctuations in float have no effect on the base.
Correct Answer:
Verified
Correct Answer:
Verified
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