a)-Consider a 1 billion increase in reserves in the banking system due to a 1 billion increase in discount lending by the central bank. You may assume a reserve requirement of 1090, banks do not hold excess reserves; and, unchanged currency holding by the public. If deposits increase by 9 billion: i. Explain why the banking system is not in equilibrium. ii. Outline, using T-accounts what needs to happen in the banking system for equilibrium to be reached (b)o Explain with the aid of a diagram how the Discount Rate and the Interest rate on excess reserves minimises fluctuations in the Fed Funds rate due to changes in the demand for reserves