1. The money multiplier declined significantly during the period 1930–1933 and also during the recent financial crisis of 2008–2010. Yet, the M1 money supply decreased by 25% in the Depression period but increased by more than 20% during the recent financial crisis. : What explains the difference in outcomes? Please clearly define the money multiplier, the Depression of 1930-1933, and the M1 and M2 money supply within your response. Please also explain and support your argument using the text and at least one journal article. (500words)
2. What does the Taylor rule imply that policymakers should do to the fed funds rate under the following scenarios? o Requirements: Please apply the question above to each of the following scenarios. a. Unemployment rises due to a recession. b. An oil price shock causes the inflation rate to rise by 1% and output to fall by 1%. c. The economy experiences prolonged increases in productivity growth while actual output growth is unchanged. d. Potential output declines while actual output remains unchanged. e. The Fed revises its (implicit) inflation target downward (500 words)
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