Calculate how much the nominal money supply increases

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(a) If Wachovia bank receives a $10,000 deposit, and the required reserve ratio is 0.10 (= 10%), how much can the bank loan out? Assume that Wachovia keeps zero excess reserves and only keeps the required minimum reserves.

(b) Now that the multiplier process has started, where will it end? What I mean is, use the simple money multiplier to calculate how much the nominal money supply increases at the end of the multiplier process.

Reference no: EM13205388

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