A commercial bank has checkable-deposit liabilities of $500,000, reserves of $150,000, and a required reserve ratio of 20 percent.The amount by which a single commercial bank and the amount by which the banking system can increase loans are

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The bank must hold 20% of $500,000 in reserves, which is $100,000. With $150,000 in reserves, it has $50,000 in excess reserves to lend. The banking system can increase loans by the excess reserves multiplied by the money multiplier (1/0.20), which is $250,000.

A Commercial Bank Has Checkable-Deposit Liabilities of $500,000, Reserves of $150,000