Suppose the public and commercial banks are holding their preferred relative amounts of currency and demand deposits and certificate of deposits and banks are holding their desired levels of excess reserves. Given the data below, answer the following questions: Current required reserve ratio on deposits is 10 percent. Current required reserve ratio on certificates of deposits is 15percent. Currency outstanding is Ksh 100 billions. Demand deposits with commercial banks are Ksh 400 billions. Certificate deposits with commercial banks are Ksh 200 billions. Total reserves held by commercial banks are Ksh 100 billions. . b) By how much will demand deposits increase if the central bank increases bank deposits by Ksh 20 billions?

c. Determine the effect of the injection of reserves in (b) on the money supply. (5 Marks)

d. What is the volume of excess reserves the bank holds after the above deposit expansion has been completed?