1. What are the components of the monetary base and why is it a useful concept?

2. What are excess reserves and how are they calculated?

3. If a bank has $10,000 in excess reserves, what is the maximum amount it could

lend?

4. Wealth in the United States has grown steadily. If wealth were the only factor

affecting currency demand, what do you expect would have happened to the

currency-deposit ratio over time?

5. Suppose that a bank currently has assets of $24,000 in reserves and $176,000 in loans

and liabilities of $200,000 in deposits. If the required reserve ratio is 10%, what are

the banks required and excess reserves? What is the bank likely to do?