Chapter 14 Homework 1. Suppose that there is currently $900 billion in circulation, $700 billion in deposits, $30 billion in excess reserves, and $80 billion in required reserves. a. Calculate each of the following: Reserves Monetary Base Money Multiplier Money Supply b. Suppose that banks have borrowed $40 billion of their total reserves from the Fed. What's the non-borrowed Monetary Base? c. Suppose that banks eliminate their excess reserves, using them to payback most of the borrowed reserves from the Fed. Calculate each of the following: Reserves Money Multiplier Money Supply Borrowed Reserves d. Explain why the money multiplier from part c is greater than the money multiplier in part a. Also, explain whatwhy happened to the money supply. e. Assuming that part c has occurred, what is the maximum money supply possible if all dollars currently in circulation get deposited at banks? Use T-accounts for the non-bank public and for the banking system to support your answer. 1. Does your answer in part e differ from a situation where there are $0 in circulation and the Fed purchases $900 billion in securities from banks? Use a T-account for the banking system to support your