A chartered bank has $1 million in deposits and $55,000 in required (desired) reserves. Its excess reserves are initially zero.

Q.1) What is the bank's required (desired) reserve ratio? (1 mark)

Q.2) Suppose a further $280,000 is deposited in the bank. What is the increase in the dollar amount of the bank's required (desired) reserves ? (2 marks)

Q.3) Identify the final increase in the money supply in the banking system due to the banks increase in excess reserves. (3 marks)