The Fed increased the monetary base between 2008
Question: The Fed increased the monetary base between 2008 a…
The Fed increased the monetary base between 2008 and 2011.
What happened to the money multiplier between 2008 and2011? What would the money multiplier have been if the currency drain ratio hadincreased? What would the money multiplier have been if thebanks’ desired reserve ratio had notchanged?
QUESTIONS:
Between 2008 and2011, the money multiplier increased, decreased, or remained the same?
In a typicalyear, the currency drain ratio is 0.11 and the desired reserve ratio is 0.01.
So if neither the currency drain ratio nor thebanks’ desired reserve ratio hadchanged, the money multiplier would have been approximately ______.
If both the currency drain ratio and the desired reserve ratio hadincreased, the money multiplier would have been…
- a) Greater than nine
- b) Less than nine
- c) Equal to nine
If thebanks’ desired reserve ratio had notchanged, everything else remained the same, the money multiplier would have been …
- a) Approximately equal to nine
- b) Less than 9
- c) Greater than 9