1.. If the Bangko Sentral ng Pilipinas wants to increase the money supply with open-market operations, what does it do? Explain.

2. What is the discount rate? What happens to the money supply when the Bangko Sentral ng Pilipinas raises the doscount rate? Explain.

3. According to the quantity theory of money, what is the effect of an increase in the quantity of money?

4. According to the Fisher Effect, how does an increase in the inflation rate affect the real interest rate and the nominal interest rate?

5. What are the costs of inflation? Which of these costs do you think re most important for the Philippine economy?