If the reserve ratio is 12 percent, $5,000 of excess reserves can create how much new money?

A reserve ratio of 12% means that 12% of all money deposited must be held at the bank "on reserve." This gives depositors access to their money in a timely fashion and also helps the Federal Reserve control the supply of money in the economy. The remaining 88% of any deposit can be loaned out to earn a return for the bank. For a $5,000 deposit, that would be $4,400 of new money created.