This exercise deals with the multiple expansion of bank deposits under the following simplified assumptions:

All bank-created deposits stay in the banking system.

All newly created funds are held as demand deposits.

All banks create loans equal to every available (excess) reserve dollar.

The reserve requirement for all deposits is 8 percent.

Complete the chart based on the assumptions provided above.

Bank position Bank One Bank Two Bank Three Sum of the first three banks' deposit expansion Multiple Expansion of Bank Deposits New loans and New deposits investments $100,000 F Required reserves