MO = Cash* + Reserves ["Monetary Base"] M1 = Total Deposits + Cash* ["Money Supply"] *held by the public a. Jack deposits the $100 in his pocket. Write-down the bank's balance sheet after this deposit. What is MO and M1? What is M1? b. Assume that the bank decides to hold the minimum amount of reserves, and loans out the rest to another resident in town, Karly. Write down the bank's balance sheet after this deposit. What is MO and M1? How has MO and M1 changed relative to part (a)? c. Now assume that Karly fully deposits her $80 back into this bank. Write down the bank's balance sheet after this step. What is MO and M1? d. Continue to assume that any cash gets redeposited back into this bank. Furthermore, the bank always loans out as much as possible, i.e., the bank holds reserves to just satisfy the required reserve ratio. What would the bank's balance sheet look like, after successive iterations of loans and deposits back into this bank? [Hint: Reserves will reach 100, and Total Deposits = 100 + 80 + 64 +... =1/R] What is MO and M1? The balance sheet you write below represents the maximum amount of M1 when Jake deposits his $100. [The bank is "fully loaned up", as it is holding zero excess reserves.]