c) NG new d) w declir larger Question 1: Suppose the reserve requirement for checking deposits is 10 percent in an economy. a) Suppose the Fed conducts a $1 million open-market purchase of government bonds. What is the largest possible increase in the quantity of money available? What is the smallest possible increase? b) If banks decided to hold 20 percent of checking deposits as excess reserves, what would be the overall change in the money multiplier and the quantity of money? c) Now assume banks do not hold excess reserves. Show the T-account for one of the banks. Question 2: Consider an economy with a single bank called the National Bank. Suppose the National Bank has $500 in bank capital. Then assume the National Bank receives S1000 in deposits. It keeps 10 percent as reserves and loans the rest. a) Show a T-account for the National Bank