. Consider a new deposit to the Canadian banking system of $1000. Suppose that all commercial banks have a target reserve ratio of 10 percent and there is no cash drain. The following table shows how deposits, reserves, and loans change as the new deposit permits the banks to create money.

Round Change in Deposits Change in Reserves Change in Loans 1st $1000 $100 $900 2nd 3rd 4th 5th