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Assume that the following data describe the current condition of the commercial banking system: Instructions: Enter your responses as a whole number. In part b,
Assume that the following data describe the current condition of the commercial banking system: Instructions: Enter your responses as a whole number. In part b, round your response to one decimal place. a. How large is the money supply (M1)? \\( \\$ \\) billion b. How large are excess reserves? \\$ billion Now assume that the public transfers \\( \\$ 20 \\) billion in cash into 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 d. How much would the total lending capacity of the banking system be after this portfolio switch? \\$ billion e. How large would the money supply be if the banks fully utilized their lending capacity? \\$ billion f. What three steps could the Fed take to offset this potential growth in M1? reserve requirements the discount rate bonds
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