1.The inflation rate in the United States has jumped from 1.4% in January 2021 to 5.4% in July 2021. If the inflation rate stays at or above 5.4% for some time, how would the Federal Reserve use their monetary tools to bring inflation back down to its target of 2%?

2.How would the change in the inflation rate from January 2021 to July 2021 affect the realized rate of return for lenders who expected the inflation rate to remain below 2%? Use the Fisher equation in your answer.

3.A European investor puts up 1,000,000 in a six-month U.S. denominated investment in June 2020 with an APR of 6%. The exchange rate of euros to U.S. dollars in June 2020 was 1.112. In December 2020, the exchange rate of euros to U.S. dollars was 1.194. What is the APR in euros that the investor earns from the investment? Explain your answer.