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Assume the entire economy contains $5000 worth of one-dollar bills.(a) If people fail to deposit any of the dollars, but instead hold all $5000 as currency, how large is the money supply?(b) If people deposit the entire $5000 worth of bills in banks that are required to observe a 100% reserve requirement, how large is the money supply?(c) If people deposit the entire $5000 worth of bills in banks that are required to observe a 20% reserve requirement, how large is the money supply?(d) In part (c), what portion of the money supply was created due to banks?(e) If people deposit the entire $5000 worth of bills in banks that are required to observe a 10% reserve requirement, how large could the money supply become?
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