Based upon this deposit, the bank's excess reserves have increased by $90 and, if the bank lends all excess reserves, the money supply could eventually grow by as much as $1000.
Fractional reserve banking is a banking system where a percentage of all deposits are kept as reserves with the central bank. The amount kept as reserves is determined by the reserve ratio.
If the reserve ratio is 10%, the percentage of the bank's excess reserve is 90% (100% - 10%).
Amount of excess reserves = 90% x $100 = $90.
The total increase in money supply can be determined by the money multiplier.
Money multiplier = amount deposited / reserve requirement
$100 / 10%
$100 / 0.1 = $1000
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