Could you please using graphs of the market for reserves, explain and indicate what happens to the cash rate, borrowed reserves, and nonborrowed reserves in the following situations, holding everything else constant. Note that different starting positions of the graph can result in different results; please cover all potential scenarios.

Question (a)

A big bank has just failed, and many commercial banks are expecting a potential bank panic.

Question (b)

The public increases spending as a result of the end-of-financial-year sale, but the RBA wants to keep the cash rate constant.