4. When a central bank increases bank reserves by $1, the money supply rises by more than $1. The amount of extra money created when the central bank increases bank reserves by $1 is called the money multiplier. (LO2) a. Explain why the money multiplier is generally greater than 1. In what special case would it equal 1? b. The initial money supply is $1,000, of which $500 is currency held by the public. The desired reserve-deposit ratio is 0.2. Find the increase in money supply associated with increases in bank reserves of $1, $5, and $10. What is the money multiplier in this economy? c. Find a general rule for calculating the money multiplier.