Question

The m2 money multiplier is ___________ the m1 multiplier. a. substantially smaller than b. not much different than c. substantially larger than d. twice as large as

Answer 1

The m2 money multiplier is substantially larger than the m1 multiplier.

A multiplier is simply a factor that boosts or increases the base value of something else. For example, doubling the multiplier doubles the base. On the other hand, a multiplier of 0.5x halves the base value. There are different multipliers in finance and economics.

The word multiplier means a factor that amplifies or increases the base value of another. For example, in the multiplication formula 3 × 4 = 12, a multiplier of 3 increases the value of 4 to 12. A multiplier is the amount of new income generated by adding additional income. The marginal propensity to consume is the proportion of money that is spent

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