Multiple Choice
Assume a money multiplier of 4 and a government expenditure of $20 million. If the Treasury borrows $20 million from the banking system while the banks have excess reserves, the money supply will
A) rise by $5 million.
B) rise by $20 million.
C) rise by $80 million.
D) not be affected.
Correct Answer:
Verified
Correct Answer:
Verified
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