Suppose the public holds $300 cash and the monetary base is $500. The required reserve ratio is 20%. If all the banks are fully loaned up, what will be the amount of deposits?

Monetary base = Cash in hand + Demand deposits

=> Demand deposits = Monetary base - Cash in hand

= 500 - 300

= 200

Reserves = Demand deposits = 200

Maximum deposits = (Reserves - Excess reserves) * Maximum banking multiplier

= (200 - 0) * (1 / 20%)

= 1000