If the Bank of Canada buys $1 million of bonds from the First National Bank, but an additional 10% of any deposit is held as excess reserves, what is the total increase in chequable deposits? (Hint: Use T-accounts to show what happens at each step of the multiple expansion process.)

The desired reserve ratio on chequable deposits is 10%, banks do not hold any excess reserves, and the public’s holdings of currency do not change.