Question: Can you help me solve this two part question please. 1a) The People's Bank of China announced it will cut the required reserve ratio for

Can you help me solve this two part question please.

1a) "The People's Bank of China announced it will cut the required reserve ratio for five big banks." (Source: Reuters, January 20, 2017). Explain whether this is a contractionary or expansionary policy. Then explain using the MS-MD curve what impact it will have on the amount of money in the economy and the short-term interest rates. (6 marks)

1b)Describe the channels with proper graphs by which this policy ripples through the economy and explain how each channel operates in the short run and long run to determine the interest rates, consumption, investment, trade balance, real GDP and price level. Use SLF-DLF and AS-AD curves to explain your answers. (9 marks)

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