2. (50 points) Answer the following questions. I am not looking for mathematical answers; I want you to reason through the questions and use your intuition to answer them. (a) ( 10 points) What are the differences between the Baumol-Tobin and Money in the Utility Function models of money demand? (b) (10 points) Why did Milton Friedman argue for a 0% nominal interest rate? (c) (10 points) True/False/Uncertain (and explain why): Wage growth resulting from an increase in expected inflation is a sign, not the cause, of inflation. (d) (10 points) True/False/Uncertain (and explain why): If the central bank buys $10 million worth of securities, then the money supply will increase by exactly $10 million. (e) (10 points) True/False/Uncertain (and explain why): The Taylor Rule is used as a "rule of thumb" rather than an explicit rule in central banking