Initially a bank has a required reserve ratio of 15 percent and no excess reserves.If $10,000 is deposited in the bank,then,ceteris paribus,

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The required reserve ratio is 15%, which means that the bank has to keep 15% of the deposit ($1,500) as required reserves and can lend out the rest. Therefore, the bank can increase its loans by $8,500 ($10,000 - $1,500 = $8,500). Total reserves will increase, but not by $10,000 since the bank can lend out a portion of the deposit.

Initially a Bank Has a Required Reserve Ratio of 15