Question

Please reflect on how the money multiplier concept can be an important tool of both expansionary as well as contractionary monetary policy for any central bank such as the U.S. Federal Reserve Bank?

Answer 1

The money multiplier concept is an important tool for both expansionary and contractionary monetary policies for any central bank such as the U.S. Federal Reserve Bank.

What is the money multiplier concept?

The money multiplier concept describes the quantity of money created by banks through the interaction of bank deposits and reserve ratios.

When the U.S. Federal Reserve wants to increase the money supply, it reduces the reserve ratio and vice versa.

Thus, the money multiplier concept is an important tool for both expansionary and contractionary monetary policies for any central bank such as the U.S. Federal Reserve Bank.

Learn more about the money multiplier concept at brainly.com/question/16777479 and brainly.com/question/27464330

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