Assume that the following data describe the current condition of the commercial banking system: Value Total reserves: $80 billion Transactions deposits: $650 billion Cash held by public: $200 billion Required reserve ratio: 0.10 a. How large is the money supply (M1)? b. Are the banks fully utilizing their lending capacity? Banks currently have Answer is complete but not entirely correct. Now assume that the public deposited another $30 billion in cash in transactions accounts. S 850 billion billion in $ 15.0 excess reserves. c. What would happen to the money supply initially (before any lending takes place)? Assuming the $30 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 switch? S 229 billion e. How large would the money supply be if the banks fully utilized their lending capacity? S 6,970 billion f. What three steps could the Fed take to offset the potential growth in M1?