a. How large is the money supply (M1)? 1, 100 billion b. Are the banks fully utilizing their lending capacity? billion in No, because banks currently have 20 V excess reserves. Now assume that the public deposited another $20 billion in cash in transactions accounts. c. What would happen to the money supply initially (before any lending takes place)? Assuming the $20 billion in cash is not new money in the system, M1 will not change d. How much would the total lending capacity of the banking system be after this portfolio X switch? 80 billion e. How large would the money supply be if the banks fully utilized their lending capacity? 1,200 X billion