1. a)True or false and explain: If bank's expectations cause them to reduce lending there will be an unanticipated increase in the money supply. b) Suppose banks have a 20% reserve requirement and hold no excess reserves. Banks have $4500 in reserves and the non-bank private sector holds $1500 in currency. What is the total money supply? What happens to the total money supply if the non-bank private sector deposits $500 of their currency into the banking system? c)Suppose there was only one firm that manufactured wooden barber poles (the red and white striped pole outside barber shops). Would this firm have pure monopoly power? Explain!

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