Question

The commercial banking system, because of a recent change in the required reserve ratio from 8 percent to 10 percent, finds that it is $50 million short of reserves. if it is unable to obtain any additional reserves, it must reduce deposits and money supply by

Answer 1

If it is unable to obtain any additional reserves, it must reduce deposits and money supply by $500 Million.  
$50 Million x 10 = $500 Million.
(10% of $500 Million = $50 Million)