Solve all the attachments

1. Explain how open-market operations work. 2. Explain the difference between the discount rate and the federal funds rate. 3. Explain how lowering the reserve ratio affects the economy. 4. Explain each of the following in terms of whether they were discretionary fiscal policy, non- discretionary fiscal policy, or monetary policy: TARP, the AIG bailout, the 2009 stimulus package and the rapid increase in unemployment compensation spending. 5. Explain how Fed policy can favor financial interests or the interests of workers. 6. Why might an agreement like NAFTA increase GDP but not be favored by union members?Question 2 (4 points): You have obtained a sub-sample of 1744 individuals from the Current Population Survey (CPS) and are interested in the relationship between weekly earnings and age. The regression, using heteroskedasticity-robust standard errors, yielded the following result: Earn _hat= 239.16 + 5.20xAge , R2 = 0.05. SER = 287.21., (20.24} (0.57) where Earn and Age are measured in dollars and years respectively. (a) Is the relationship between Age and Earn statistically signicant? Justify the answer. (b) The variance of the error term and the variance of the dependent variable are related. Given the distribution of earnings, do you think it is plausible that the distribution of errors is normal? Explain. There are 40 firms in a perfectly competitive market. Each firm has total costs of: C(q) =75+4q' Demand in the market is Q =220- 0.5P a. Calculate the short-run equilibrium price, quantity, and economic profit for a typical firm in this industry. b. Is the industry in long run equilibrium? Why or why not? c. Suppose with 40 firms in the industry, the government passes new worker safety standards that cause each firm's fixed cost to rise by $25. Calculate the new short-run equilibrium price, quantity, and firm output level. d. What will happen to the number of firms in the industry after the new government regulations go into effect?4. In class we assumed that in the Solow model the aggregate production function should have constant returns to scale. That is F(:L'K,3:N) = :L'F(K,N) for any a: > 0. One such function is the Cobb-Douglas production function Y = KaNla for 0