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    Macroeconomics Study Set 10
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    Exam 14: Monetary Policy and the Federal Reserve System
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    If the Fed Decreases the Monetary Base by $100 Million
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If the Fed Decreases the Monetary Base by $100 Million

Question 25

Question 25

Multiple Choice

If the Fed decreases the monetary base by $100 million and the money multiplier is 4,M1 will


A) rise by $400 million.
B) fall by $400 million.
C) rise by $25 million.
D) fall by $25 million.

Correct Answer:

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