Suppose that the Bank of Canada conducts an open market purchase of $2000 from a commercial bank. Assuming all banks' desired reserve ratio is 0.20, or 20 percent, and currency drain ratio is 0. Answer the questions below:
a. Show the effects of open market operation on Bank of Canada's balance sheet, and commercial bank's balance sheet.

b. By how much monetary base will increase? By how much money supply will increase?

c. Will banks' desired reserve ratio likely to increas1r decrease during a financial crisis? how does this affect the site of money multiplier?

d. The currency drain ratio has been increasing or decreasing during the past two decades?

e. How does this affect the site of money multiplier?