What is the amount of new loans the bank can make

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A bank receives new deposits equal to $200,000 and the required reserve ratio is 10%. Assuming that desired ratio is equal to their required reserve ratio and no currency drain (C=0) answer the following questions::

a. What is the amount of new loans the bank can make? Show your work.

b. What is the amount of total deposit expansion (change in money supply) that can occur?

Reference no: EM13887785

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