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If a bank receives an initial deposit of $1,000,000, and faces a reserve requirement of 20%, How much must the bank hold in required reserves?

If a bank receives an initial deposit of $1,000,000, and faces a reserve requirement of 20%,

  1. How much must the bank hold in required reserves?
  2. How much will the bank have available in excess reserves?
  3. How much is the resulting potential increase in the money supply?

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