a) Money supply is influenced several economic agents. You are given the following equations: M=C+D B =C+R Where M is money supply, C is currency in circulation and D is demand deposits, B is the monetary base R is the reserve ratio. Derive the money multiplier and explain the factors that influence money supply in an economy Assume that you have a monetary base of ZMW 80 million and a reserve-deposit ratio of 10% and a currency deposit ratio of 80%. Compute the money multiplier and the level of money supply (Hint M = mB where m is the money multiplier). Assume the reserve-deposit ratio declines to 5%, what is the new level of money supply. Explain the observed difference between your answer and the one in question ii above b) Demographics play an important role in the observed volatility of the propensity to consume in both the long run and short run. Discuss this in the light of the life cycle hypothesis