1. If the public's desired money balances were to increase and the Fed were to allow the quantity of money in circulation to rise, how would such a Fed policy response influence the short-run equilibrium price level and level of real GDP per year?
2. According to the quantity equation, if the U.S. money growth rate were to double as a consequence of the Fed's quantitative easing policies, what would be the effect on the inflation rate, other things being equal?