The Fed increases bank reserves in the system by $75 million. If there are no drains,the expected change in bank deposits is

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The expected change in bank deposits is equal to the reserve ratio multiplied by the increase in bank reserves. Assuming a reserve ratio of 10%, the expected change in bank deposits would be 0.10 x $75 million = $7.5 million. However, this $7.5 million increase in deposits would then be subject to further lending and redeposit, which could result in a total expected change in bank deposits of $750 million.

The Fed Increases Bank Reserves in the System by $75