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Suppose that one giant bank, the Haumongous Bank of America,held
all the checking deposits of all the people, subject to a 10
percent legal reserve requirement. If Reserve increased by $1
billion, could the Humongous Bank Expect to lend out more than 90
percent of the reserve increase, knowing that the new deposit must
come back to it? Would this’s change the ultimate money-supply
multipler? Explain both answers.