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Value Total reserves: $180 billion Transactions deposits: $800 billion Cash held by public: $300 billion Required reserve ratio: 0.20 a. How large is the money supply (M1)? billion b. Are the banks fully utilizing their lending capacity? because banks currently have Now assume that the public deposited another $20 billion in cash in transactions accounts. billion in excess reserves. c. What would happen to the money supply initially (before any lending takes place)? Assuming the $20 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? billion e. How large would the money supply be if the banks fully utilized their lending capacity? billion HUI UH