(Answered) When a central bark buys a govemment security froes an indwidal, what etfect does this have on the…

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How does the money multiplier amplify a central bank’s purchase into broader money supply?
The money multiplier shows how added reserves can generate more deposits through bank lending. With a reserve requirement r, the theoretical multiplier is about 1/r, so a purchase P can expand broad money up to P×(1/r). Real-world factors like excess reserves, cash preferences, and regulation typically reduce this theoretical expansion.