A bank has $1,000 in deposits and the required reserve ratio is 10 percent. Based on this information Write down your responses as a whole number.

Required reserves = Deposit * reserve ratio

= 1,000 * 10%

= $100

Excess reserves = Deposit - Required reserves

= 1,000 - 100

= $900

Assets                                                             Liabilities

Reserves                                               Deposits                $1,000

   Required               $100

   Excess                   $900

Total assets            $1,000                 Total liabilities      $1,000

b. Potential total deposit creation:

= Excess reserves / Reserve ratio

= 900 / 10%

= $9,000