2.. a. Suppose that the required reserve ratio is equal to 10%. If the currency-to-deposit ratio is fixed at 20%, what is the money multiplier? If the monetary base is $100 million, what is the money supply?

b. Suppose the currency-to-deposit ratio is 15%, the required reserve ratio is 5%, and total deposits in the banking system are $10,000. What are the monetary base, the money supply, and the money multiplier?

c. Use the same information from part (b). Now suppose that an increase in consumer pessimism regarding the safety of the banking system leads the population to increase their currency-to-deposit ratio to 25%. How should the central bank respond to keep the money supply from changing? By how much?