If the required reserve ratio is 10 percent and the Fed buys a $5,000 security from a depository institution,the money supply:

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When the Fed buys a $5,000 security from a depository institution, it directly increases the reserves of that institution by $5,000. With a 10 percent required reserve ratio, this initial increase in reserves can support a total increase in the money supply of up to $50,000, because each dollar of reserves can support $10 of deposits ($5,000 x 10 = $50,000), following the money multiplier effect (1/required reserve ratio).

If the Required Reserve Ratio Is 10 Percent and the Fed