1. The Fed wants to increase the money supply. What are the main instruments available to it, and how can each, specifically, increase the money supply? (Hint: there are three)

2. Can the Fed affect the currency-deposit ratio?

3. a. What is a bank run?

b. Why might one occur?

c. If the Fed took no action in the face of a bank run, what would be the effects on the money supply and on the money multiplier?

d. How does the existence of the FDIC help prevent this problem?

4. a. Why does the Fed not stick more closely to its target paths for money?

b. What are the dangers of targeting nominal interest rates?

5. Why might Feds choose intermediate targets for it monetary policy, as opposed to directly pursuing its ultimate targets? What are the benefits and the dangers of using these intermediate targets?