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You take $120 you had kept under your mattress and deposit it in your bank account. If this $120 stays in the banking system as
You take $120 you had kept under your mattress and deposit it in your bank account. If this $120 stays in the banking system as reserves and if banks hold reserves equal to 10 percent of deposits.
By how much does the total amount of deposits in the banking system increase?
By how much does the money supply increase?
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