Suppose that the T-account for First National Bank is as follows: Assets Liabilities R eserves $100,000 D eposits $500,000 L oans 400,000 a. If the Fed requires banks to hold 5% of deposit as reserves, how much in excess reserves does First National now hold? b. Assume that all other banks hold only required amount of reserves. If First National decides to reduce its reserves to only the required amount, by how much would the economy’s money supply increase?