Consider the banking system of an economy in which the minimum reserve requirement is 25%. Suppose that currency in the amount of $35000 is deposited into a bank as demand deposit (a) Subject to the reserve requirement, the bank keeps 25% of the deposit as reserve and loans out the rest. The borrowers keep the borrowed money in cash. How would the initial deposit of $35000 into the banking system affect the money supply? (b) Suppose that the borrowers in (a) instead deposit the borrowed money into their banks. No banks keep excess reserve and no one keeps their money in cash. How would the initial deposit of S35000 into the banking system affect the money supply? ( (c) Using the change in money supply you find in (b) as the benchmark, explain whether the change in money supply in each of the following scenarios is larger than, equal to, or smaller than the benchmark. (i) The minimum reserve requirement decreases to 20%. (ii) Some of the banks in the economy keep excess reserve. (iii) Some of the citizens in the economy keep part of their money in cash. (iv) Electronic payment becomes the norm in the economy. The $35000 was not deposited into a bank but into one of the electronic-payment companies (like Alipay in China). The money deposited into these companies is used as a medium of exchange, and therefore those deposits are considered as part of the money supply. However, the electronic-payment companies do not have bank licenses. They are not allowed to loan out the deposits they receive, and they simply deposit the money into their company bank accounts. It remains the case that no banks keep excess reserve and no one keeps their money in cash. (v) The same situation as in (iv) except that the electronic-payment companies can now loan out the deposits they receive. They are, however, not regulated like banks and are not subject to any reserve requirement. They are more aggressive than regulated banks in making loans