The policy tracker page in the IMF website2 summarizes the key discretionary fiscal and monetary policies that governments are taking to tackle the economic impacts of the COVID-19 pandemic. Consider the following examples.

https://www.imf.org/en/Topics/imf-and-covid19/Policy-Responses-to-COVID-19#U

(a) The People's Bank of China (PBOC), China's central bank, has lowered its required reserve ratio for commercial banks by 50 - 100 basis points (one basis point = 0.01%). Explain, with an aid of the money demand and money supply diagram, how this policy would affect the money market. (6%)