The reserve requirement is 20%, and Leroy withdraws $1000 from his chequing account. The bank

does NOT want to hold excess reserves.

a) What would be the immediate affect on the bank's balance sheet after the deposit?

b) How much of the $1000 deposit had the bank kept in reserves?

c) By how much does the bank reduce loans based on the $1000 withdrawal?

d) What is the maximum contraction in the money supply possible?

e) By how much did the monetary base change?