The required reserve ratio is 10 percent, and the potential change in demand deposits is $100 million. What are original excess reserves?

Question

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With a required reserve ratio of 10 percent, banks are required to hold 10 percent of their demand deposits as reserves. If the potential change in demand deposits is $100 million, then the original excess reserves would be $10 million, which is 10 percent of the potential change in demand deposits.

The Required Reserve Ratio Is 10 Percent, and the Potential