Q1. Define the term instrument or tool" of Federal Reserve policy. How does an instrument differ from an intermediate target variable? Q2. What are the advantages of open market operations relative to the other instruments of monetary policy? Explain. Q3. Assume the economy descends into recession next year, and the unemployment rate increases to 8 per cent. Assuming actual GDP is $14,000 billion ($14 trillion), use Okun's Law as expressed by the following equation: (GDP-GDppotential = 2(U 5%) to calculate GDP the nation's loss of output and income. Q4. Discuss the main goals of monetary policy. Explain why each goal is important. Q5. Explain the three criteria used to determine whether a particular variable is a worthy candidate for an intermediate target variable of monetary policy