Answer:
The money supply will increase by 12,500 dollars
Explanation:
when the money is deposited the loan will make the required reveneus and start loans for the remained over and over
The multiplier effect will be 1/required reserve ratio: 1/0.2 = 5
we multiply 2,500 dollars times the money multiplier of 5
total icnrease inthe money supply: 2,500 x 5 = 12,500
