1. Suppose that The Fed decides to buy $10,000 of government securities from Goldman Sachs. What impact would this have on the Federal Funds rate when the current Federal Funds rate is above the zero lower bound (ZLB)? What if the current Federal funds rate is at the ZLB?

2. Briefly discuss key similarities and differences regarding quantitative easing (QE) versus traditional open market transactions conducted by the Federal Reserve.

3. Describe how the interest rate on reserves paid by the Federal Reserve contributes to monetary policy. In particular, how can the IOR be used to to manage the Fed Funds rate target in the current situation in which excessive reserves exist in the banking system?