Final answer:
The money multiplier is calculated by dividing the increase in the quantity of money by the increase in the monetary base. For a monetary base increase of $200,000 that raises the money quantity by $800,000, the money multiplier is 4.0. So the correct answer is option CA.
Step-by-step explanation:
To calculate the money multiplier, we need to know the increase in the monetary base and the resultant increase in the quantity of money. In this case, a $200,000 increase in the monetary base leads to an $800,000 increase in the quantity of money. Therefore, the money multiplier is calculated by dividing the change in the quantity of money by the change in the monetary base:
Money Multiplier = Change in Money Quantity / Increase in Monetary Base = $800,000 / $200,000 = 4.0
Thus, the money multiplier is 4.0, which corresponds to option C.
The money multiplier is calculated as the ratio of the change in the quantity of money to the change in the monetary base. In this case, an increase in the monetary base of $200,000 leads to an increase in the quantity of money by $800,000. Therefore, the money multiplier is $800,000/$200,000 = 4.0.