Suppose the desired reserve ratio is 10 percent and a bank receives a new deposit for $100,000.By what amount do the bank's liabilities initially increase?

Question

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The bank's liabilities initially increase by the full amount of the deposit, which is $100,000. The reserve requirement of 10 percent means that the bank must hold $10,000 of this deposit as reserves and can lend out the remaining $90,000.

Suppose the Desired Reserve Ratio Is 10 Percent and a Bank