Explain by how much could the total money supply

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Tracy Williams deposits $500 that was in her sock drawer into a checking account at the local bank. A. How does the deposit initially change the T-account of the local bank? How does it change the money supply? B. If the bank maintains a reserve ratio of 10%, how will it respond to the new deposit? C. 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: EM1356989

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