If the banking system has demand deposits of $100,000,total reserves equal to $15,000,and a required reserve ratio of 10 percent,the banking system can increase the volume of loans by a maximum of

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The maximum amount of loans that can be created is determined by the excess reserves, which are the total reserves minus the required reserves. In this case, the required reserves are 10 percent of the demand deposits, or $10,000. The total reserves are $15,000, so the excess reserves are $5,000. Therefore, the maximum amount of loans that can be created is $5,000 multiplied by the money multiplier of 1/0.1, which equals $50,000.

If the Banking System Has Demand Deposits of $100,000,total Reserves