uppose the entire banking system has $50 million in excess reserves and a required reserve ratio of 10 percent. The deposit-creation potential of the banking system is:

Answer: The deposit-creation potential of the banking system is $500 million.

Explanation: To solve: take the money that the banking system has in excess reserves $50 million and multiply it by the reserve ratio of 10%. $50,000,000 x 10 = $500,000,000