Question

Assume the required reserve ratio is 12 percent and that the commercial banking system has $110 million in excess reserves. The maximum amount of money which the banking system could create is: (round to the nearest number) g

Answer 1

Answer: $917 million

Explanation:

From the question, we are informed that the required reserve ratio is 12 percent and that the commercial banking system has $110 million in excess reserves.

Based on the above analysis, the maximum amount of money which the banking system could create will be:

= $110,000,000/12%

= $110,000,000/0.12

= $ 917,000,000

= $917 million