(a) What is the direct effect (increase / decrease / no change) of each of the following events on MI and M2. No explanation is required. (i) You transfer $1,000 from your cheque account to your savings account. (ii) As the transaction is completed, your company receive cash by settle down a negotiable certificate of deposits (NCDs) issued by a restricted licensed bank. (2 marks) (b) Initially, public holds $500 million currency in the banking system and the required reserve ratio is 12.8 percent. The following shows current total holdings of banking system in Country X: Reserves = $600 million Deposits = $2,500 million Loans = $1,900 million (i) Calculate the current money supply and the excess reserve for Country X. Show your workings. (3 marks) (ii) Suppose the government decide to use digital money to replace cash. Public are required to deposit all their currency into the banking system. Calculate the new money supply of Country X if the banks can lend out all the excess reserves. Round your answer to 2 decimal places. (3 marks) (c) Consider a world composed of two countries, Country A and Country B. Assume that both countries produce cars and wheat using labour and capital as factors of production. The following table shows the data of output in these two countries: Country Outputs per labour Cars Wheat (in units) (in bushels) 180 15 225 Country A Country B (i) Which country has absolute advantage in producing cars? Which country has the absolute advantage in producing wheat? Explain. (2 marks) (ii) Calculate each of the opportunity costs of producing cars and wheat for Country A and Country B in a table. Which country has the comparative advantage in producing cars? Which country has the comparative advantage in producing wheat? Show your workings. Round your answer to 2 decimal places