Answer:
The answers ares stated below
Explanation:
(1) New deposit = $10,000.
(a) Bank A's reserves increase by $10,000
(b) Bank A's required reserves increase by $10,000 x 20% = $2,000
(c) Bank A's excess reserves increase by $(10,000 - 2,000) = $8,000
(d) Bank A can make a loan of maximum $ 8,000 (Only the excess reserve component).
(e) Deposits will increase a maximum of (Initial deposit / Required reserve ratio) = $10,000 / 0.2 = $50,000