One of the major functions of commercial banks is credit creation Commercial banks create credit by advancing loans and purchasing securities. They lend money to individuals and businesses out of deposits accepted from the public. Commercial banks have to maintain a specified percentage of their deposits as liquidity which is set by the central bank. This reserve requirement controls the extent to which commercial banks can grow money in the economy. Assuming you only have one commercial bank in your economy, a reserve requirement of 20% and an initial deposit of 200 Page 3 of 5 Scanned with CamScanner REQUIRED: A. Show for the first four days and the last day the balance sheet of your commercial bank to [15 Marks B. List and explain five types of financial institutions [5 Marks C. What are the benefits of a financial system 15 Marks) D. illustrate and explain the effect of an increase in money supply on interest rates 15 Marks IN One of the major functions of commercial banks is credit creation Commercial banks create credit by advancing loans and purchasing securities. They lend money to individuals and businesses out of deposits accepted from the public. Commercial banks have to maintain a specified percentage of their deposits as liquidity which is set by the central bank. This reserve requirement controls the extent to which commercial banks can grow money in the economy. Assuming you only have one commercial bank in your economy, a reserve requirement of 20% and an initial deposit of 200 Page 3 of 5 Scanned with CamScanner REQUIRED: A. Show for the first four days and the last day the balance sheet of your commercial bank to [15 Marks B. List and explain five types of financial institutions [5 Marks C. What are the benefits of a financial system 15 Marks) D. illustrate and explain the effect of an increase in money supply on interest rates 15 Marks IN