\ Homework Ch. 22\ \Q LSU ECON Flashcards / Quizlet X| Course Hero\ | X + gt; https: / / newconnect . mheducation . com / flow / connect . html ?

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\ Homework Ch. 22\\Q LSU ECON Flashcards / Quizlet X| Course Hero\| X+>https: / / newconnect . mheducation . com / flow / connect . html ? return Url = https % 3 A % 2 F % 2 F connect. mheducation . com %2 F param web % 2 F index. htm 1 % 23% 2 Fregistration % 2 F sign up % 2 F d- echevar. {or *\Homework Ch. 22 0SavedHelpSave & ExitSubmit17When a central bank increases bank reserves by $1 , the money supply rises by more than $1 . The amount of extra money createdwhen the central bank increases bank reserves by $1 is called the money multiplier .\a . The money multiplier is generally greater than 1 because :"8.33points_ in a fractional-reserve banking system , each dollar bill is spent more than once ( velocity is larger than 1 ) , thereby increasing themoney supply by more than $1 .`Skippedmoney supply by $2 .when a central bank increases bank reserves by $1 , deposits are automatically increased by $1 as well , thereby increasing thein a 100 percent reserve banking system , each dollar of reserves supports exactly one hundred dollars of deposits , therebyincreasing the money supply by $100 .`eBOOKO in a fractional-reserve banking system , each dollar of reserves can support more than one dollar of deposits , therebyincreasing the money supply by more than $1 .`ReferencesThe money multiplier is equal to 1 when :"O reserves = depositsO reserves > deposits.O reserves < deposits.b. The initial money supply is $1, 000, of which $500 is currency held by the public . The desired reserve-deposit ratio is 0.2. Calculate.the increase in the money supply associated with increases in bank reserves of $7 . What is the money multiplier in this economy ?\Assume that individuals do not change their currency holdings .`Instructions : Enter your responses as whole numbers .Increase in bankIncrease in moneyreservessupplyMoney multiplier : [ ] .C . A general rule for calculating the money multiplier is< ^prey.11 of 12*^\Next >`PHOTO AN\ O Type here to search`GENEONE