The consolidated balance sheet of the U.S. banking system indicates:

AssetsLiabilities

Reserves$30,000Checkable deposits$100,000

The purpose of this exercise is to show what happens to the maximum money-creating ability of the banking system when the Fed lowers the reserve requirement. Assume the Fed's reserve requirement is 1%. Use the balance sheet in question 6.

Must write out the mathematical formulas and show your calculations

a.The simple money multiplier equals _______________.

b.The banking system has excess reserves of $_______________.

c.Loans and the money supply can be expanded by a maximum of $______________.