Question 2 (25 marks total) In the country of Monesia, the central bank requires a minimum reserve ratio of 10%, and all the commercial banks always maintain the same reserve ratio as one another. The combined T-account of all the commercial banks shows: Asset Liabilit Reserves $ 50 billion Deposit $500 billion Loans 350 billion Other assets 100 billion Half of the \"Other assets above are government bonds. The people of Monesia also hold some government bonds. a) Suppose the central bank purchases $25 billion worth of government bonds from the commercial banks in order to increase the money supply. What will be the minimum possible increase of money supply in Monesia? Describe how it may happen, also find out the excess reserves in the banking system after it happened. (4 marks) b) Suppose the same action by the central bank as in Part a). What will be the maximum increase of money supply in Monesa possibly achieved by this action of the central bank? Describe how it may happen, and show calculations. (4 marks) c) Alternative to the above, suppose the central bank purchases $20 billion government bonds from the Monesian people, for the same purpose of increasing the money supply. What is the minimum possible increase of money supply in Monesia? Describe how it may happen. (4 marks) d) Suppose the same action by the central bank as in Part d). What will be the maximum increase of money supply possibly achieved by this action of the central bank? Describe how it may happen. (4 marks) e) Continuing with Part e), draw the combined T-account of the all the commercial banks after the events your described in Part e) have happened. (5 marks) f) If the central bank wants to achieve the highestincrease of money supply by open market operation, should it purchase government bonds from the banks or from the people? Explain (you can draw hint from your answers above). (4 marks)