Suppose the reserve ratio imposed by the Fed on the banks is 5%. Assume further that the banks do not hold any excess reserve and that the...

Suppose the reserve ratio imposed by the Fed on the banks is 5%. Assume further that the banks do not hold any excess reserve and that the individuals do not hold any cash. An individual depositor deposits $800 in a bank. This is round 1. Explaining the process of deposit creation, calculate the additional deposits that will be created in the next 4 rounds. Determine the total increase in money supply in five rounds.