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If the central bank buys $1M worth of bonds from a bank A but an additional 10% of the deposits are held as excess reserves,
If the central bank buys $1M worth of bonds from a bank A but an additional 10% of the deposits are held as excess reserves, what will be the total increase in deposits?
Assme the desired reserve ratio is 10%.
(Using the T-account to show what happens at each stage of the the deposit expansion process).
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