1. The banking system has $8,000 in reserve, $22,000 in loans, and $30,000 in deposits. If the reserve requirement is 10% (a) What is the maximum amount of loans the banking system could make given the amount of $8,000 reserve held at the Fed? (b) If the Fed lowers reserve requirement to 5%, what is the maximum amount of loans the banking system could make given the amount of $8,000 reserve held at the Fed? (c) If the Fed increases reserve requirement to 20%, what is the maximum amount of loans the banking system could make given the amount of $8,000 reserve held at the Fed? 2. What are the effects (increase or decrease) on (i) money supply; (ii) interest rate; (ii) credit availability for each of the following Fed actions? (a) Increase reserve requirement in the banking system (b) Purchase securities from the market (c) Lower the Fed discount rate (d) Sell securities to the market