Money and Banking Problem Set I - Page 2 of 5 Due: 8/29/2021 1. (15 points) Suppose James Holden of the Rocinante decides to formally buy his ship from the MCRN. The ship costs $35,000,000, and he borrows it from Fred Johnson of the Outer Plants Alliance (OPA). He borrows the money, which is then deposited into an MCR account on Mars. Hint: For this question, refer to the first set of lecture notes posted on iLearn. (a) (5 points) Assuming that Earth, Mars, and the OPA all use the same currency, and the Central Bank managing the money supply in the Solar System set a reserve requirement of 10%. What is the total change to the money supply? (b) (5 points) Suppose that after Marco Inaros of a radical faction of the OPA decides to launch a number of asteroids covered in Martian cloaking technology hits Earth, and kills tens of millions of people, crashing their entire economy overnight. The central bank, recognizing that there is a severe risk of a bank run, decides to set the reserve requirement ratio to 50%. What is the total change to the money supply? (c) (5 points) What can you infer about how the reserve requirement ratio affects the change to the money supply?