Section II Short Answer Questions 1. [17 points in total] Bank A, a Canadian commercial bank currently has $300 million in deposits, has been operating with a target reserve ration of 8%. Jiamin Liu has just inherited the equivalent of $1 million Canadian from a relative living in China and deposits this sum in this bank. a) If the bank continued to operate on an 8% target reserve basis, what is the magnitude of its excess reserves right after Jiamin's deposit? (assume Bank A had no initial excess reserves.) Please also draw the T-account to reflect Bank A 's current situation. ( 6 points) b) If other Canadian banks also had 8% target reserve ratio and the general public does not hold currency in their hands, what might be the final change in the Canadian money supply? ( 2 points) ppose that Bank A considers the risk of extending new loans from the excess erves created by Jiamin's deposit to be too high. It decides to hold all of min's deposit in reserves. What is its new target reserve ration, approximately? 11 a multiple expansion in the bank deposit occur? (4 points) that the scenario in (a) holds. Jiamin deposits $1 million in Bank A. All ian banks, including Bank A, have a constant target reserve ratio of 8%. rer, the Canadian public normally holds 2% of its money holdings in the f currency. If all banks used all of their excess reserves to extend loans, ould be the maximum possible change in the Canadian money supply? (5