If the required reserve ratio is 20 percent and the Fed buys a $10,000 security from a depository institution that currently has no excess reserves,the money supply:

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When the Fed buys a $10,000 security from a depository institution, it injects $10,000 into the banking system. With a 20 percent reserve requirement, banks are required to hold 20% of deposits as reserves but can lend out the remaining 80%. This initial $10,000 can theoretically support up to $50,000 in new money creation through the money multiplier effect, as each dollar deposited can be lent out multiple times, with each round of lending being only 80% of the previous round due to the 20% reserve requirement. This process increases the money supply by $50,000.

If the Required Reserve Ratio Is 20 Percent and the Fed