Briefly explain the money creation process, Microeconomics

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Briefly explain the money creation process

Question 1: Briefly explain the money creation process.

Question 2: The required reserve ratio is 10%. Dollar Bank has $500,000 in deposits and $100,000 in reserves. Assume all other commercial banks are loaned up.

(a) What is the value of this bank's excess reserves?

(b) What is the value of the additional loans that can be made by the commercial banking system?

(c) What is the money multiplier?

(d) How much in total deposits will be supported by Dollar Bank's reserves, if this bank lends all its excess reserves and there is no leakage from the banking system?

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