Using the multiplier effect and behavioral explanation

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In recent years Sweep Programs have grown throughout the U.S. With this financial innovation, banks automatically sweep excess funds from their customers’ checkable deposits into interest bearing MMDAs, which are part of savings and time deposits. Using the multiplier effect (using just the main component that changes) and a behavioral explanation, explain what effect this has upon M2 determination. Briefly explain how multiple expansion applies here. How did this action change the monetary base? Name another variable within the equation for M2 determination, along with its specific change, that would have the same qualitative effect on changing M2.

Reference no: EM131216270

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