4. [16 points in total] Answer the following questions. Each sub-question is independent to each other. Please be precise and neat. a). Suppose you decide to withdraw $100 in cash om your chequing account. Draw a T- account showing the effects of this transaction on your bank's balance sheet, assuming that the reserve ratio is 5%. (3 points) b). How does an increase in interest rates a'ect aggregate demand? Briey discuss how each component of aggregate demand is affected. (Hint: there are 4 components in aggregate demand). (5 points) c). Suppose that real GDP is currently $1.31 trillion, potential GDP is $1.35 trillion, the government purchases multiplier is 2. Holding other factors constant and assume that there is no crowding out effect, by how much will government purchases need to be increased to bring the economy to equilibrium at potential GDP? If there is crowding out ef'Fenr .wi\" the government need to increase more or less than the amount you calculated? Explain. (4 points) d). Assume that banks does not hold excess reserves 'Ihe banking system has $60 million in reserves and has a reserve requirement of 10%. The public holds $20 million in currency. Then the public decides to withdraw $6 million in currency om the banking system If the Bank of Canada wants to keep the money supply stable by changing the reserve requirement, what will be the new reserve requirement? Show your calculation. (4 points)