please answer these questions as short and clear as you can

1. What are the primary responsibilities of the Federal Reserve? If the Fed wants to increase the supply of money, how does it usually do so? (5 points)

2. List and describe six costs of inflation. (6 points)

3. Define nominal exchange rate and real exchange rate, and explain how they are related. If the nominal exchange rate goes from 100 to 120 yen per dollar, has the dollar appreciated or depreciated? (4 points)

4. How does the economy’s behavior in the short run differ from its behavior in the long run? Draw the model of aggregate demand and aggregate supply. What variables are on the two axes? (5 points)

5. Suppose that the government reduces spending on highway construction by $10 billion. Which way does the aggregate-demand curve shift? Explain why the shift might be larger than $10 billion. Explain why the shift might be smaller than $10 billion. (5 points)

6. Suppose the Federal Reserve’s Open Market Committee decides to purchase $1 million worth of bonds on the market. What is the anticipated impact on the money supply? In this economy, the required reserve ratio is 20%. (5 points)

7. Suppose George deposits $100 at First National Bank. First National Bank then loans out all its excess reserves to Jack who deposits the money in Second National Bank. Show your work by illustrating the process of money creation/destruction by providing the T-accounts of for the two banks. In this economy, the required reserve ratio is 10%. (5 points)