Suppose rr is the desired reserve (R/D) and the money supply (M) consists of bank deposits (D) only. Then, the money supply will equal:

Name: Suppose rr is the desired reserve (R/D) and the money supply (M) consists of bank deposits (D) only. Then, the money supply will equal:
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The money supply (M) is determined by the formula M = D/rr, where D is the total bank deposits and rr is the reserve ratio. Solving for D in terms of R (reserves), we get D = R/rr, thus M = R/rr.

Suppose Rr Is the Desired Reserve (R/D) and the Money