economics

1. Suppose the T-Account for RBCTD National Bank of Canada is as follows: Liabilities Reserves $100,000 Deposits $500,000 Loans $400,000 a. If the Bank of Canada requires banks to hold 5% of deposits as reserves, how much in excess reserves does RBCTD now hold? b. Assume all other banks hold only the required reserves. If RBCTD decides to reduce its reserves to only the required amount, by how much will the economy's money supply increase? 2. Suppose that the Bank of Canada sells 100 million Euros from its foreign exchange reserves, and the exchange rate is $1.50 Canadian per Euro. a. Explain what will happen to the Canadian money supply. b. Now, suppose the Bank of Canada does not want the money supply to change. What would it need to do to sterilize its foreign exchange market operation