If the required reserve ratio is equal to 10 percent, a single bank can increase its loans up to a maximum amount equal to 10 percent of its excess reserves.
The required reserve ratio is the percentage of deposits that commercial banks are required to keep with the Central Bank as reserve. The maximum amount a single bank can increase is a loan is equal to the inverse of the required reserve ratio.
Maximum amount of increase in loans = 1 / required reserve ratio
1/0.1 = 10
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