Humongous Bank is the only bank in the economy. The people in this economy have $20 million in money, and they deposit all their money in Humongous Bank (show all work and calculations).

• Humongous Bank is required to hold 5% of its existing $20 million as reserves, and to loan out the rest. What the amount of the required reserves? Assume no loans have been made, how many loans can be made now?
• What is the money multiplier?
• Assume that Humongous bank is part of a multibank system. If all money is loaned out, how much can the money supply increase?