Assume that an economy is in equilibrium when there occurs an increase in the supply of capital. The available quantity of labor remains fixed. Once the economy has adjusted to its new equilibrium, which of the following has increased?

The money multiplier:

A. Is equal to the required reserve ratio times transactions deposits. B. Gets larger as the required reserve ratio increases. C. Is the reciprocal of the required reserve ratio. D. Represents the lending capacity of an individual bank.

If the required reserve ratio is 10 percent, currency in circulation is $400 billion, checkable deposits are $800 billion, and excess reserves total $0.8 billion, then the M1 money multiplier is

A) 2.5. B) 1.67. C) 2.0. D) 0.601.