Answer the following questions in complete sentences:

1. What happens to the money not held in reserve?
 
 

2. What would happen if all depositors in a bank withdrew all of their money at once? Why is that not possible?
 
 

3. List three ways the Federal Reserve can affect the money supply:
 
 

4. Why do you believe the Federal Reserve was created to affect the money supply?
 
 

5. Describe the reaction to the economy when there is too much money available and when there is too little money in circulation.