Consider an economy where the monetary base is $1,000. People hold 1/4 of their money as currency and 3/4 as bank deposits. Banks hold 20% of their deposits in reserve. (a) (5 points) What are the money multiplier and the money supply? (b) (5 points) Suppose the central bank nowwants to increase the money supply by $500 by changing the required reserve-deposit ratio, what should be the new reserve-deposit ratio (assume that banks hold no excess reserve)? (c) (5 points) Assume again that the reserve-deposit ratio is 20%. Suppose the central bank now wants to increase the money supply by $500 through an open-market operation, does it buy or sell government bonds? Calculate, in dollars, how much the central bank needs to transact.