If the Federal Reserve requires a reserve requirement, RR, equal to 10% and the bank has found an excess of $1,000,000 in reserves, then the bank could absorb an additional deposits and loans equal to:

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With a reserve requirement (RR) of 10%, the bank must keep 10% of deposits as reserves. If the bank has an excess of $1,000,000 in reserves, it can support additional deposits of $10,000,000, because 10% of $10,000,000 is $1,000,000, which is the amount of excess reserves available for lending.

If the Federal Reserve Requires a Reserve Requirement, RR, Equal