1. What are the Fed's tools of monetary control? Which one is the primary tool? How is it implemented? Which tool does it NOT like use? why? Which tool acts as a signal of changes in MP? How did it stabilize markets in the 2009 crisis? Did it do a good job?
2. Why hold money and why is the money demand curve inversely related to interest rates? How does the market determine interest rates? What happens if interest rates exceed equilibrium? Below equilibrium? Why do interest rate and bond prices move inversely?
3. Explain the effect of an Open Market Purchase on investment expenditures and AD. How would the Fed use MP to close a recessionary gap? Expansionary gap? What are the problems of hitting natural output targets? What type of MP is being used by the Fed now?