For each of the following scenarios, determine whether the money supply will increase, decrease, or maintain unchanged.

a. The Fed sells $80 million of bonds to banks. (2 marks)

b. The Fed lowers the required reserve ratio (assuming banks do not hold excess reserves). (3 marks)

c. The economy enters a recession and banks have difficulties finding creditworthy borrowers. (3 marks)

d. Depositors become concerned about safety of the depository institutions. (2 marks)