Fed buy $300,000 worth of bonds, if the money multiplier is 3 and want to increase the money supply by $900,000. As the formula of the money multiplier is change in total money supply upon change in total monetary base.
<h3>What is money multiplier?</h3>
The multiplier effect is a term used in economics to describe the proportional increase or decrease in final revenue that occurs as a result of a capital injection or withdrawal.
In effect, it calculates the influence of a change in economic activity, such as investment or spending, on a company's total economic output.
Thus, Fed buys $300,000 worth of bonds.
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