Please answer 5 out of the 6 questions below. For each question, state whether the statement is true, false, or uncertain AND provide a correction/explanation on the pages to follow. Deductions will be taken off if your answers do not make sense and/or if your answers are not grammatically correct. Some questions will also ask for a graph or a model. You are always free to provide MORE than what is required, Questions that are not attempted or are deemed unsatisfactory cannot be revised. 1. T/F/U. The Fed can control the money supply using several tools: (1) Open market operations or the buying and selling of U.S. Treasury bonds; (2) Discount rate lending and the term auction facility; (3) Paying interest on reserves held by banks. If true, explain how the Fed can alter each to impact the money supply; if false, explain where and why the above is incorrect. 2. T/F/U. When the Federal Reserve decides to do quantitative easing, it decreases aggregate demand and the LRAS does not shift. Draw and explain a figure to support your answer. Also, tell me what quantitative easing is. 3. T/F/U. The best case scenario for fiscal policy is when the federal reserve can offset a shock to AD with an increase in M. Draw and explain a figure to support your point. 4. T/F/U. Two problems the Fed faces are systemic risk and moral hazard. If true, explain and provide an example for each. If false explain where and why these are incorrect. 5. T/F/U. You are more likely to be rationally ignorant towards local politicians than federal politicians. If false, in addition to your explanation, explain why you know so much about former President Trump. If true, in addition to your explanation, explain why you tend to know so little about local politicians. 6. T/F/U. The median voter theorem implies that third parties can win elections. In your answer. explain what the median voter theorem is and whether third parties are potential winners