Explain the textbook model for how in the U.S. the Federal Reserve (Fed) uses monetary policy to manage aggregate demand (AD) in the economy. In your response you must discuss (name and describe) at least three tools the model says the Fed uses, ans explain how the model says each of those tools, though directional change, affect the money supply, interest rates, and AD (done through example). Hint: Review Table 16.3

This video references the 2008 financial crisis and the Asian crisis in the early 2000's. Summarize the the list of issues missing from the textbook model that Goodhart says Central Bankers in the real world should include in their understanding of the macroeconomy. According to Goodhart, where do funds flow when interests rates rise in the controlled side of banking? Why does he say there is a problem with too much tightening of monetary policy? Who gets left out when monetary policy is too tight? What does Goodhart say about the political problem of fiscal versus monetary policy that causes central bankers to face pressure for economic action in the face of a crisis?

video: https://www.youtube.com/watch?v=7p8fPRGACUQ