Note: To get the full marks, please remember the following to include in your answer (wherever it an Write your response with a complete sentence - Write down the formula/e or definition clearly with an example Show the full calculation work (up to 2 decimal points) clearly step by step for each cell/item Draw the diagram identifying each axis and curve properly Provide rationale/reasoning/justification for your answer Consider a new deposit to the Canadian banking system of $8060. Suppose an commercial banks hy reserve ratio of 7 percent and there is no cash drain. The following table shows now deposits, regret it loans change as the new deposit permits the banks to "create" money. Round A Deposits A Reserves A Loans First $8000 $560 $7440 Second Third Fourth Fifth The first round has been completed in the table. Now, recalling that the new loans in the first round new deposits in the second round, complete the second round in the table. a. B By using the same approach, complete the entire table. Read the note above. (6 points) b. You have now completed the first five rounds of the deposit-creation process. What is the for deposits so far as a result of the single new deposit of $8000? Explain. (1 point) C. .This deposit-creation process could go on forever, but it would still have a finite sum. In that showed that the eventual total change in deposits is equal to 1/v times the new deposit, when target reserve ratio. What is the eventual total change in deposits in this case? Explain. (1 pole d. What is the eventual total change in reserves? Explain. (1 point) G3TOLIA EXR . What is the eventual change in loans? Explain. (1 point) 3. The following diagrams show the monetary equilibrium and the demand for investment. The begins with money supply Ms, money demand Mo, and investment demand I . The interest rate 23TAGIONA) OT 2MOITOUR Interest Rate ood zink mont 19969 Yes evomer ton of thedisnw bevieset a>lood lis mute e noneazzoq tionin everton deum 2916bibn am euc mixs Jordto 10 290ive O ino feel, aston solder edood beshortive Quantity of Money Desired Investment a. Beginning at the initial equilibrium, suppose the Bank of Canada increases the money happens in the money market, and what happens to desired investment expenditure? ( b. Beginning in the initial equilibrium, suppose there is a reduction in the demand for m perhaps, by bonds becoming more attractive to firms and households). What happens market, and what happens to desired investment expenditure? (3 points) Explain why an increase in money supply can have the same effects on desired investme C. 's a reduction in money demand. (4 points)