1. A member of the parliament stated that "Increasing money supply would decrease the interest rates". Would you agree with the guest? Use words and graphs to explain to the member the timing and magnitude of different effects resulting from an increase in the money supply on the interest rates.

1. A bank manager must decide whether to borrow or lend money to make profit. His staff provided him with the information that the current interest is 5% and the expected inflation is 8.1%. Ceteris paribus, would you advise the Bank manager to borrow or lend? Explain

1. Analysts are predicting a higher-than-expected inflation. Use the bond supply and demand framework to predict the effect on the interest rates. Be sure to include a graph.