Solve the following problems. Each problem is worth 10 points. a) (7 points) Suppose a bank has $2,000 in reserves, $17,500 of deposits, and a 10 percent reserve requirement. What is the amount of excess reserves? First National Bank Assets Liabilities Reserves $2,000 Deposits $17,500 Loans 9,800 b) (8 points) Suppose the entire economy has: $100 dollars kept in coffee cans and wallets $500 in saving accounts $300 in credit card limits $120 in traveler's checks $450 in checking accounts $600 in money market mutual funds Calculate M1 and M2. c) (8 points) A bank has $50,000 in deposits and has $6,250 in reserves. What is the maximum amount that the money supply could increase if $10,000 is deposited to this bank and the reserve requirement ratio is 12.5%? d) (7 points) What is the change in the money supply when the Fed sells $500 worth of bonds and the required reserve ratio is 20 percent assuming banks hold no excess reserves