(a) Explain in detail, with diagrams where appropriate, the various mechanisms the Fed uses

to influence money supply and interest rates in the US. You must define and discuss each

mechanism, and how it works, and the interactions between various mechanisms.

(b) Consider the following statement from the case Secrets of the Temple: Demystifying the

Fed, Changing the funds rate is just the beginning of how the Fed impacts the economy.

Indeed, a popular misconception is that the tightness (when the funds rate is raised) or

ease (when the funds rate is lowered) of monetary policy can be judged by simply looking

at the funds rate.

Explain this statement from your understanding of Feds role and also information

provided in the case.