In the simple deposit expansion model,if the Fed extends a $100 discount loan to a bank that previously had no excess reserves,deposits in the banking system can potentially increase by

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When the Fed extends a $100 discount loan to a bank, that bank now has $100 in excess reserves. The potential increase in deposits across the banking system is determined by the money multiplier, which is the reciprocal of the required reserve ratio. Therefore, deposits can potentially increase by $100 times the reciprocal of the required reserve ratio.

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