Deposits in the banking system and money supply increase

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You take $1000 you had kept under your mattress and deposit it in your bank account. If this $1000 stays in the banking system as reserves and if banks hold reserves equal to 20 percent of deposits, by how much does the total amount of deposits in the banking system and money supply increase? If the required ratio is 10% now, does the money supply increase more or less? Explain your answers.

Reference no: EM13802218

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