I'm struggling with this question.

Assume a10 percent required reserve ratio, zero excess reserves, and no currency leakages.

Calculate the potential money multiplier. 10 (Enter your response as an integer value).

If the Federal Reserve purchases $4 million in U.S. government securities, calculate the change in total deposits in the banking system as a whole.

I tried the .10 x 4 million = 0.4 million for the required reserves. 4 million - .04 million = 3.6 million (excess reserves). 3.6 million (excess reserves) x multiplier of 10 (1/.10) =

I am having trouble calculating the max change in loans. The potential money multiplier was calculated as 10.I though it was 364 million.

A note I just had come up said the following: The Federal Reserve System buys $4 million in U.S. government securities, then the actual change in total deposits = actual money multiplier x change in total reserves. In general, the Potential Money Multiplier = 1 / Required Reserve Ratio is not equal to the actual money multiplier.Actual money multiplier is different from potential money multiplier because there are leakages such as currency drains, which happens when people hold excess cash in their wallets, and banks hold excess reserves. Both of these leakages make the actual multiplier smaller than the potential multiplier.But in this case, the potential and actual multipliers have the same value, since banks hold no excess reserves and there are no currency drains.