Bank A has an increase in deposits of $20 million dollars and all bank reserve requirements are 10%. Bank A loans out the full amount of the deposit increase that is allowed. This amount winds up deposited in Bank B. Bank B finds out the full amount possible as well and this amount winds up deposited in Bank C. What is the total increase in deposits resulting from these three banks

Total increase in deposit = $54,200,000

Explanation:

given data

deposits = $20 million dollars

bank reserve = 10%

solution

we know that Deposit in bank A is = $20,000,000

and Reserve @ 10% = $2,000,000

so

Bank A loans or bank B deposit will be = $20,000,000 - $2,000,000

Bank A loans or bank B deposit = $18,000,000

here Reserve @ 10% = $1,800,000

so

Bank B loans or Bank C deposit will be here = $18,000,000 - $1,800,000

Bank B loans or Bank C deposit = $16,200,000

so that

Total increase in deposit will be = Bank A + Bank B + Bank C ... 1

put here value we get

Total increase in deposit = $20,000,000 + $18,000,000 + $16,200,000

Total increase in deposit = $54,200,000