Explain the multiple expansion process and detail a multiple expansion scenario that features at least three deposits. Be sure to provide exact numbers for each step and note the total amount of new money created from the initial deposit.

What will be an ideal response?

Answers and examples will vary but should demonstrate understanding of the multiple expansion process and how a deposit can be used to make a series of loans, each of which creates new money. One possible answer is: Bank A receives a deposit of $20,000. It has a required reserve ratio of 10 percent, leaving the bank with $18,000 in excess reserves. Bank A makes a loan with this money to Caleb, who deposits the funds into Bank B. Bank B also has a reserve ratio of 10 percent, meaning it has $16,200 in excess reserves. Bank B makes a loan to Ysenia using this money. Ysenia deposits the money into Bank C, which has a reserve ratio of 12 percent, leaving it with $14,256 in excess reserves. It loans this money to Malik, who deposits it in Bank D. The total amount of money created because of the initial deposit is $48,456.