This means that the total amount of bank loans is: T = A *(1-r)1 + A *(1-r)2 + A *(1-r)3 + ……Every period to infinity. Obviously, we can’t directly calculate the amount of each bank loan and add them all together because there are an unlimited number of terms. However, from mathematics we know that the following relationship applies to infinite series: x1 + x2 + x3 + x4 + … = x /(1-x)Note that in our equation, each term is multiplied by A. If we take it as a common factor, we get: T = A [(1-r)1 +(1-r)2 +(1- r) 3 +. ..]Note that the terms in square brackets are the same as our infinite series of x items, where (1-r) replaces x. If we replace x with (1-r), the series is equal to (1-r)/(1 – (1-r)), which is reduced to 1 / r – 1. So the total amount of bank lending is:T = A *(1 / r – 1) Therefore, if A = 20 billion and r = 20%, the total amount of bank loans is: T = \$20 billion * (1 / 0.2-1) = \$80 billion. Recall that all the funds borrowed will eventually be returned to the bank. If we want to know how much the total deposit has increased, we also need to include \$20 billion in deposits into the bank. So the total increase is 100 billion US dollars.