4 In problem 2, suppose that the Freezone central bank undertakes an open market sale of bonds of a1 billion. a What happens to the monetary base? b What happens to the reserves of the banks?

c After one round of bank lending, what is the change in the quantity of loans, deposits, reserves and currency in circulation? d After two rounds of bank lending, what is the change in the quantity of loans, deposits, reserves and currency in circulation? e When excess reserves are zero, what is the change in the quantity of loans, deposits, reserves and currency in circulation? f What is the magnitude of the money multiplier in Freezone?