How Does the Federal reserve Create the Money Supply The Benefit and the responsibility of Commercial banks in the Federal reserve System(continued) The Required reserve(rr) Required reserve ratio (r)x Deposit D) Excess Reserve(re Actual Reserve(r)-Required reserve(rr)How Does the Federal Reserve Create the Money Supply • The Benefit and the Responsibility of Commercial Banks in the Federal Reserve System (continued): The Required Reserve (Rr ) = Required Reserve Ratio (r r )  Deposit (D) Excess Reserve (Re ) = Actual Reserve (R) - Required Reserve (Rr )