1. Suppose that the reserve requirement is 9.15%. If 4 firms deposit a total of $1 million into a demand deposit account at the First national Bank, what is the total deposit creation in the banking system using the simple deposit multiplier? ANSWER = 10.93 million
2. Consider the preceding question using the money multiplier. If the currency ratio is 38% and the excess reserve ratio is 2%, what is the change in money supply? ANSWER = 1438522.2
3. If the reserve requirement were eliminated (and the currency ratio is 40% and the excess reserve ratio is 1%), how much would this change size of the money supply?
4. What is the practical justification of the reserve requirement, besides as a monetary policy tool?

PLEASE ANSWER 3 AND 4. Thank you!