3. Indicate whether the following phenomena will lead to a shift in the reserves supply and demand curve for the Bank of England (BoE), where the horizontal axis indicates the quantity of reserves and the vertical axis the interest rate of the Bank of England. In your answer, use a graph of the money market to show how the Bank of England’s action translates into a higher interest rate.

a. Economic contraction.

b. Increasing deposit base.

c. Selling governmental bonds.

d. If the demand curve shifts to the left, how should the BoE respond to keep the interest rate constant?