1.

a.In a column in the Wall Street Journal, two economists at the Council on Foreign Relations argue: Simple put, the Fed must choose between managing the level of reserves and managing rates. It cannot do both". Do you agree? Briefly explain

b. A former Federal Reserve official argued that at the Fed "the objectives of prices stability (i.e. inflation) and low long-term interest rate are essentially the same objective." Briefly explain how these two moves together.

2.

Explain how each of the following events would affect the aggregate supply curve

a.A higher price level

b.An increase in the labor force

c.An increase in the quantity of capital goods

d.Technological Change

e.Faster income growth in other countries.