Exercise 2: This exercise contains a certain number of independent questions. Attempt all of them. Justify your answer. a. Explain the difference between the short run aggregate supply curves and the long run aggregate supply curve. Explain how they are related. Why does one of them shift and the other one does not? b. The price of a 1-year zero-coupon bond is 90. At maturity, the bond promises to pay a principal amount of $100. What is the corresponding yield or interest rate? c. When people expect that prices will fall by 4%, what is the expected inflation rate? Is the nominal interest rate greater or smaller than the real interest rate? d. What is the current monetary policy of the Bank of Canada? e. Finally, the governors of the Bank of Canada acknowledged publicly that the Inflation rate has been running at 7% or more since at least January 2022. i. Is the behavior of the inflation rate consistent with the current Bank of Canada monetary policy? ii. If not, what should happen to the workers expected inflation rate and the growth rate of nominal wages? iii. If not, what should happen to economic activity, real GDP, and the unemployment rate