Q. 5 (2 points) Suppose the Fed lowers the discount rate from 0.75% to 0.5% to stimulate the economy, and as a result, banks borrow $10 billion from the Fed at the discount window..

(1) How much will total reserves in the banking system_______ (increase; decrease)?

(2) How much will the monetary base _______(increase; decrease)?

(3) How much will the money supply________ (increase; decrease)?

(4) What will happen to the market interest rate (rise or fall), ceteris paribus?

(5) Is the Feds policy an expansionary monetary policy or a contractionary monetary?