Please consider the following assumptions for the fractional banking system:

• Banks hold 10% reserves against checking deposits;
• Individuals and corporations divide their monetary assets as 20% cash and 80% deposit; and
• Banks loan their excess reserves to earn profits.

Considering these assumptions, how does $1,000 deposit into an economy multiply? (Money Multiplier Effect) Please explain step-by-step changes in the money supply?

I believe that I have done this part correctly:

Assume that the bank has 10% of the Reserve again checking deposit on hand. If you put down a $1,000 initial deposit. 20% of the total is equivalent to $200 in cash, and the remaining 80% is equal to $800 in deposits. Money multiplication in the economy is broken down into several steps. The bank would have to hold 10% of the deposit, or $80, in the Reserve and can lend the remaining $720 as a loan because it got an 80 $800 deposit. However, instead of giving the individual a loan for this sum, the bank opens a bank account in his name and deposits the money there. This is how the bank creates a new $720 deposit. It will offer the remaining amount as a loan to another party after holding a reserve of 10%, or $72. This phase will continue until the total sum is depleted.

2)How does the money get depleted how much does the bank keep holding back every time?

3)What is the money multiplier it should be from the range of 2.5 to 4. It should not be more.