The following is information about a banking system:
New currency deposited in the system = $40 billion;desired reserve ratio = 20%;
excess reserves prior to the currency deposit = $0.
-Refer to the above information.The $40 billion deposit of currency into chequing accounts will initially create:

Question

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The initial deposit of $40 billion will create $40 billion of new demand deposits because the entire amount is deposited into the banking system.

The Following Is Information About a Banking System