1. Identify each statement as either true orfalse.

In the United States, banks keep the entire value of all customer deposits in the bank vault to meet customerwithdrawals. Banks typically loan out a portion of customerdeposits. Bank runs occur when many customers attempt to withdraw deposits from a bank at the same time and the bank is unable to pay all customerwithdrawals. The Federal Deposit Insurance Corporation (FDIC) protects bank depositors from bankfailure. The fractional reserve banking system requires all banks to keep the total value of customer deposits in their vaults to prevent bankruns.

2. Suppose banks increase excess reserves by $604913. If the reserve ratio is 4.0 percent, what is the maximum increase in the money supply?

Round your answer to the nearestdollar.