In the simple deposit expansion model,if the Fed extends a $100 discount loan to a bank that previously had no excess reserves,the bank can now increase its loans by

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In the simple deposit expansion model, when the Fed extends a $100 discount loan to a bank that previously had no excess reserves, the bank can increase its loans by an equal amount, i.e., $100. This is because discount loans increase bank reserves, which are then used to create new loans. The required reserve ratio does not play a role in this situation because the bank had no excess reserves to begin with. Therefore, the correct answer is B.

In the Simple Deposit Expansion Model,if the Fed Extends a $100