1.In the country of Extensia, the central bank engages in open market operations, usingExtensia government bonds (T-Bonds). The most recent data show the followingvalues for key monetary variables (B stands for billions of dollars):

Cash held by the public	$1B
Checking deposits	$9B
R	10%
E	10%

1a.Calculate the money multiplier.

1b.Now, assume the Extensia Central Bank sells$1B worth of T-Bonds.

Will the money supply increase or decrease? Explain.

1c.Assuming no change in E (the proportion of deposits that banks want to hold asexcess reserves), or R (the proportion of deposits that banks are required to hold),and no change in cash held by the public, what will be the new money supply inExtensia after the central bank's action? Show your calculations and formula

2) By one measure, the stock market has had an annual return of 0.5% (1/2 of 1 percent)per year since 2006.

If you had invested $10,000 in the market in 2006, how much would you have by2011, exactly five years later

Assume you did not make any additions or withdrawals after your initial investment,and that your return was compounded annually. Round your final answer to thenearest cent.