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In the simple deposit expansion model, if the fed purchases $100 worth of bonds from a bank that previously had no excess reserves, deposits in the banking system can potentially increase by:.

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Assuming the  bank that previously had no excess reserves, deposits in the banking system can potentially increase by: $100 times the reciprocal of the required reserve ratio.


What is required reserve ratio?

Required reserve ratio can be defined as the part of deposit that is expected of a bank to have as a reserves.

Based on the given information if the fed purchases $100 worth of bonds from a bank that  had no excess reserves the deposit will tend to increase by $100 mutilply by the required reserve ratio.

Inconclusion the deposit will increase by  $100 times the reciprocal of the required reserve ratio.

Learn more about Required reserve ratio here:https://brainly.com/question/13758092

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