Suppose that in 2019 customers deposit $200 into their banks, the reserve ratio in a country is 2%.

(i)Assume the amount of funds deposited by customers in 2020 stands at $400. and the reserve ratio increases to 8%. Will the money supply in the banking system increase, decrease or stay the same from 2019 levels? If it increases or decreases, calculate by how much it will change. If it stays the same, explain why. Show all steps involved in any calculations. (6 marks)