Meagan deposits $750 from her piggy bank into her checking account at Regions National Bank. The reserve requirement is 10% and the bank has no excess reserves.

a. What is the immediate effect on the M1 measure of the money supply of her deposit? Explain why.

b. What is the amount of money the local bank can lend? Explain how you arrived at your answer.

c. Calculate how much money the entire banking system can create. Show your work.

d. Give two reasons why money creation may not increase by the amount you identified in (c).