1) Using the "updated" supply and demand for loanable funds model, show the following graphically: a) Suppose we are at a Fed Funds rate of 2% and a Discount rate of 3%. Now suppose the Fed wants to raise the Fed funds to 3% and the Discount rate to 5%. Show this graphically and label. b) Suppose the Fed wanted to just lower the discount rate. What would this look like graphically? 2) Answer the following questions, keeping in mind their cohesive theme. a) What are the three tools of monetary policy? b) What is the difference between the discount rate and the fed funds rate? c) Now refer to la above, if the Fed wanted to raise the fed funds rate, what do they do? d) What type of debt instruments do they buy sell? e) Explain the process of open market operations. 3) Explain and discuss the 6 discount windows covered in class. Which discount windows were developed in the financial crisis? There are other discount windows that have been created in the last 8 years. Research these other discount windows and explain them. Make sure to list your source. 4) What are the 3 ways to target price stability? Describe each. Which does the current Federal Reserve use now? Be specific in explaining the differences, and discuss the history of how the Fed used different targeting regimes. 5) Answer the following questions: a) What is the equation for the Taylor Rule?5) Answer the following questions: a) What is the equation for the Taylor Rule? b) What is the natural rate of interest? Who was Knut Wicksell? c) How does the Taylor Rule relate? d) What happens if the Fed raises interest rates above what the Taylor rule suggests? e) What happens if the Fed keeps rates below what the Taylor rule suggests? f) Suppose It= 3%, r=2%, a(n) and a(y)=.5. Now, suppose that actual output is 0% and potential (expected) output is 3%. Also, suppose that actual inflation is 5% and expected inflation is 2%. What can we predict the Fed Funds rate will be set at? g) What do we mean when we say inflation gap or output gap? 6) What are the main apparatuses of the Federal Reserve? How is the Federal Reserve system organized in structure? How is the Fed organized to be a-political (give specific examples for all apparatuses).7) Answer the following questions about Breton Woods: a) What is Breton Woods? b) Describe the exchange rate institutions of Breton Woods and how it shaped the international financial system. c) How did Breton Woods mark the beginning of U.S. economic hegemony? d) What brought Breton Woods to a close, and what system of exchange rates replaced it? 8) Describe the following theories of exchange rate determination: a) Purchasing Power Parity b) Capital/Trade Flows c) Portfolio Flows d) Productivity 9) Explain the following transmission mechanisms, and make sure to answer part g. a) Interest rate channels b) Exchange Rate Effect C) Wealth Effect d) Credit View Balance Sheet Channel Cash flow channel g) Which of these are effective currently? What does this say about the effectiveness of monetary policy in a crisis? 10) Explain the debate between the Keynesians and the Monetarists about transmissions mechanisms. What is Friedman's "black box," what is Keynesian reduced form evidence? 11) Explain how Banks adjusted to the following things: a) Interest Rate Volatility (specifically, how this this affect both the asset and liability side of the balance sheet? b) Changes in Technology13} What is regulation {1? How did the repeal of regulation {1 create opportunities for liability.r management? Has banking become an easier or more difficult business since the repeal of regulation Cl