G 1. Explain the Fed's three tools of monetary policy and how each is used to change the money supply. Does each tool affect the monetary base or the money multiplier? Three Tools: Open Market Operations, The Discount Rate, Reserve Requirements 2. Explain how expansionary and contractionary monetary policies affect aggregate demand through the exchange rate channel. 3. Carefully define and discuss three channels by which monetary policy affects stock prices and aggregate spending. Find the evidence if that worked during the 2008 financial crisis. 4. Explain the traditional interest-rate channel for expansionary monetary policy. Explain how a tight monetary policy affects the economy through this channel. Consider the housing market bubbles in 2008, and explain the limitations for 2008 crisis if you apply the traditional view. 5. Compare two statements about exchange rates that Henry Paulson, Treasury secretary under President Bush, made in 2007: (1) "A strong dollar is in our nation’s interest." (2) "The currency [China’s yuan] needs to appreciate, and it needs to appreciate faster." Are the two statements consistent with one another? Why might the same official make both statements?