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3 Money Demand, Money Supply and Monetary Policy [50 Points] 1. Please explain why GDP deflator is counter-cyclical. 2. Considering the following statement. Monetary base

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3 Money Demand, Money Supply and Monetary Policy [50 Points] 1. Please explain why GDP deflator is counter-cyclical. 2. Considering the following statement. "Monetary base is the cash circulating in the economy." Is it true or false? Explain your answer carefully. 3. Considering the following statement. "Commercial banks attract deposits from households so that they can lend deposits to firms." Is it true or false? Explain your answer carefully. 4. Considering the following statement. "Money multiplier is determined by the central bank." Is it true or false? Explain your answer carefully.5. Considering the following statement. "In the standard price-misperceptions model, if there is an unperceived inflation, it would shift labor supply curve up and leftward." Is it true or false? Explain your answer carefully

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