Answer Key
Multiple Choice
1.D
2.C
3.C
4. B
5. B
6. B
7. A
8. D
9. D
10.D

Problem Solving
Ignore, we ended skipping this in class this semester.

Essay
It has 3 tools at its disposal: 1) lower rr, 2) decrease discount rate, and 3) increase money supply.  Each acts to increase investment and stimulate AD.  This can also acts to increase consumption as personal savings is decreased.  A contractionary fiscal policy will hinder expansionary monetary policy.