Challenge problem. assume that the public in the small country of sylvania does not hold any cash. commercial banks, however, hold 10 percent of their checking deposits as excess reserves, regardless of the interest rate. in the questions that follow, the "money multiplier" is given by 1 divided by (rr plus upper e upper r ), where rr = the percentage of deposits that banks are required to keep as reserves er = the percentage of deposits that banks voluntarily hold as excess reserves consider the balance sheet of one of several identical banks: