Banking and Expansion of Money Supply
AP Macroeconomics · Flashcards · Application
AP MACROECONOMICS · FLASHCARDS
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QUESTION
Identify the effect of an increase in the money multiplier.
QUESTION
How does increasing the federal funds rate affect the money supply?
QUESTION
What effect does a lower discount rate have on the economy?
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ANSWER
It encourages borrowing and increases the money supply. Cheaper borrowing costs stimulate lending and economic activity.
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