If the required reserve ratio is 10% and the Fed purchases $20 million worth of securities, what is the simple deposit multiplier and what happens to the amount of deposits in the banking system? Assume that banks do not hold excess reserves and the

public does not change its currency holdings.

The simple deposit multiplier is 1/0.10 = 10. The amount of deposits changes by $20 million × 10 = $200 million.