First two steps in the deposit expansion process

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Assume a simple banking world in which no banks hold excess reserves, and the public holds no currency. If a bank sells a $100 security to the Fed, explain the accounting process for the first two steps in the deposit expansion process, assuming a 10% reserve requirement. Now, separately assume that the deposit creation process has fully run its course. How much do deposits and loans increase for the banking system when the process is completed?

Reference no: EM131070721

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