Question

Maximum credit that the commercial banks can legally create is indicated by

Answer 1

Answer:

The maximum amount by which demand deposits can expand is given by the equation: ADD = AER/r. ADD is the expansion of demand deposits, AER is the excess reserves in the banking system, and r is the required reserve ratio. Thus, the maximum amount by which demand deposits can expand is equal to $30 million ($3/0.10).

Answer 2

Answer:

1/CRR*CASH RESERVERS WITH RBI