The banking system and checkable deposits?

Question

My two questions are related, and deal with the following information about a banking system: new currency deposited in the system = $40 billion; legal reserve ratio = 0.20; excess reserves prior to the currency deposit = $0.

Refer to the above information. The $40 billion deposit of currency into checking accounts will initially create:

a. $8 billion of new checkable deposits

b. $10 billion of new checkable deposits

c. $40 billion of new checkable deposits

d. $160 billion of new checkable deposits

Refer to the above information. The banking system will be able to expand the money supply through loans by:

a. $160 billion

b. $200 billion

c. $40 billion

d. $128 billion

Thanks in advance for any help!

Answer 1

d. $160 billion of new checkable deposits

b. $200 billion

Induced change in money supply = $40/20%=40/0.2=$200

Then just reduce by initial $40 billions 200-40=160