Question

At the start required reserved (RR)=legal reserves (LR)=$100($1,000 X 0.1)
With a deposit of $500, assuming that the bank places entire amount into LR, both demand deposits and LR increase by $500. thus RR=$150($1,500 X 0.1) and LR=$600. Excess reserves (ER) now equal $450($600-$150), which is the amount the bank can lend