A bank has $2500 in vault cash, $7,500 in reserves on deposit with the Fed, $1500 in gold, $500 in U.S. government securities, and $500 in other securities, and $52,500 in demand deposit liabilities. The reserve requirement for this bank is 20%. In this situation, what will tend to happen with this bank?

a. a loan for $7,500 will be made.

b. a loan for $2,500 can be made.

c. $500 in loans must be called in.

d. $2,500 in loans must be called in.

e. the money supply will shrink by $12,500.

f. the money supply will increase by $12,500.

g. the money supply will increase by $2,500.

h. the money supply will decrease by $2,500.`

Answer: . Given the situation in the question above, what will happen to the money supply for the banking system as a whole? (Use the same set of answers.)

Bank of Nova Scotia Assets Liabilities $100 Vault Cash $2880 Demand Deposits 640 Reserves w/ Fed (And lots of other Stuff) _??? Notes 300 Securities 400 Stocks 120 Gold