A Federal Reserve publication notes that when economists analyze the money supply process, they typically assume that the money multiplier is "independent of the policy actions of the central bank." Briefly explain what this assumption means? ○ A. The money multiplier has nothing to do with the money supply. B. The money multiplier is determined by a variety of factors over which the central bank has no control. C. The money multiplier is not affected by central bank actions. OD. The Fed rarely changes the money multiplier so economists typically assume that it will remain constant.
A Federal Reserve publication notes that when economists analyze the money supply process, they typically assume that the money multiplier is "independent of the policy actions of the central bank." Briefly explain what this assumption means? ○ A. The money multiplier has nothing to do with the money supply. B. The money multiplier is determined by a variety of factors over which the central bank has no control. C. The money multiplier is not affected by central bank actions. OD. The Fed rarely changes the money multiplier so economists typically assume that it will remain constant.
Chapter25: Money Creation
Section: Chapter Questions
Problem 8SQP
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Transcribed Image Text:A Federal Reserve publication notes that when economists analyze the money supply process, they typically assume that the money multiplier is "independent of the policy actions of the
central bank."
Briefly explain what this assumption means?
○ A. The money multiplier has nothing to do with the money supply.
B. The money multiplier is determined by a variety of factors over which the central bank has no control.
C. The money multiplier is not affected by central bank actions.
OD. The Fed rarely changes the money multiplier so economists typically assume that it will remain constant.
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