$1.(2$ points$)$

a$.$ Give the equation for and define what is meant by the monetary base $($i$.$e$.,$ high powered money$)$

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b$.$ Define what is meant by the money supply M$1.$

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c$.$ Give the equation for and explain what is meant by the money multiplier.

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d$.$ Give the equation for and explain the relationship between the money multiplier, the monetary base and the money supply M$1.$

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e$.$ Suppose the required reserve ratio is $8\%(\mathrm{.}08),$ the excess reserve ration is $2\%(\mathrm{.}02)$ and the currency deposit ratio is $30\%(\mathrm{.}30).$ What is the value of the money supply multiplier?

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f$.$ Suppose the Fed engages in $$40$ million in open market sale. What impact would this have on the monetary base?$$ By how much would the money supply M$1$ change?

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g$.$ Now suppose the Fed raises the required reserve ration to $10\%(\mathrm{.}10),$ ceteris paribus.$$ Now what is the value of the money multiplier? By how much would the money supply now change in part f above?

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h$.$ Now assume that department and grocery stores STOPPED accepting credit cards and consumers had to resort to shopping with cash.$$ How will the money multiplier and money supply be affected.