1. True or False. Provide at least five sentences of Explanations or calculation. The Fed can always implement tight/restrictive monetary policy to achieve low inflation without increasing unemployment rate.
2. True or False. Provide at least five sentences of Explanations or calculation. T-bills must offer a premium above the commercial paper of the same maturity to compensate for less liquidity and safety. The difference between their yields would be especially large during a boom period.
3. True or False. Provide at least five sentences of Explanations or calculation According to the theory of rational expectations, higher inflationary expectations encourage businesses and households to increase their demand for loanable funds in order to borrow and meet a planned increase in expenditures.