$1.$ Humongous Bank is the only bank in the economy. The people in this economy have $$20$ million in money, and they deposit all their money in Humongous Bank.

a$.$ Humongous Bank decides on a policy of holding $100\%$ reserves.

Draw a T$-$account for the bank.

b$.$ Humongous Bank is required to hold $5\%$ of its existing $$20$ million as reserves, and to loan out the rest.

Draw a T$-$account for the bank after this first round of loans has been made.

c$.$ Assume that Humongous bank is part of a multi$-$bank system. How much will money supply increase with that original loan of $$19$ million?

Chapter $28$: Monetary Policy and Bank Regulation:

$2.$ Is it preferable for central banks to primarily target inflation or unemployment? Why?