The required reserve ratio is 0.10 and individuals hold no cash. Total bank deposits are $200 million and banks hold $30 million in reserves. How much more money can the bank create if it does not hold excess reserves?

General accounting

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Challenge Problem. Assume that the public in the small country of Sylvania does not hold any cash. Commercial banks, however, hold 10 percent of their checking deposits as excess reserves, regardless of the interest rate. In the questions that follow, the "money multiplier" is given by 1/ (RR+ ER), where RR = the percentage of deposits that banks are required to keep as reserves ER = the percentage of deposits that banks voluntarily hold as excess reserves Consider the balance sheet of one of several identical banks Assets Liabilities and Net Worth Reserves 600 Checking Deposits 2,400 Loans 1,800 Net Worth Total Assets 2,400 Liabilities and Net Worth 2,400

Financial accounting