The Central Bank of Westeros increased the monetary base by $20 \%$. As a result, the money supply increased by $60 \%$.

What is the money multiplier in Westeros?

Choose 1 answer:
(A) This cannot be determined without knowing the reserve requirement.
(B) $\frac{1}{3}$
(C) 3
(D) $40 \%$
(E) $-20 \%$

Question

The Central Bank of Westeros increased the monetary base by $20 \%$. As a result, the money supply increased by $60 \%$.

What is the money multiplier in Westeros?

Choose 1 answer:
(A) This cannot be determined without knowing the reserve requirement.
(B) $\frac{1}{3}$
(C) 3
(D) $40 \%$
(E) $-20 \%$

Accepted Answer

∻Solution by Steps∻ ‖ step 1 ⋮ To find the money multiplier, we use the formula: $$ ext{Money Multiplier} = \frac{ ext{Percentage Increase in Money Supply}}{ ext{Percentage Increase in Monetary Base}} $$ ‖ ‖ step 2 ⋮ Substitute the given values into the formula: $$ ext{Money Multiplier} = \frac{60\%}{20\%} $$ ‖ ‖ step 3 ⋮ Simplify the fraction: $$ ext{Money Multiplier} = 3 $$ ‖ ∻Answer∻ ***C*** ∻Key Concept∻ ⚹Money Multiplier Calculation⚹ ∻Explanation∻ ⚹The money multiplier is calculated by dividing the percentage increase in the money supply by the percentage increase in the monetary base.⚹◊What formula can be used to calculate the money multiplier in Westeros?⍭ Generate me a similar question◊

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