Question: Assume that the money base is increased by $2 billion dollars, that the currency demand deposit ratio is 5%, that the reserve requirement is 10%, and that the excess reserve demand deposit ratio is 40%.
The simple money creation multiplier suggests that the money supply will
a) increase or
b) decrease by _______ billion dollars.
While the more complete multiplier suggests it will
A) increase or
B) decrease by ______ billion dollars?