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Checking account at the local bank

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Tracy Williams deposits $500 that was in her shoebox into a checking account at the local bank. The bank maintains a reserve ratio of 12%:

If every time the bank makes a loan, the loan results in a new checkable bank deposit in a different bank equal to the amount of the loan, by how much could the total money supply in the economy expand in response to Tracy's initial cash deposit of $500?

Reference no: EM132021644

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