1. Does the effectiveness of monetary policy depend on inflation expectations? Explain. 2. Briefly explain how an increase in the quantity of reserves that commercial banks hold at the Federal Reserve...

1. Does the effectiveness of monetary policy depend on inflation expectations? Explain.

2. Briefly explain how an increase in the quantity of reserves that commercial banks hold at the Federal Reserve could lead to inflation.

3. How does the zero lower bound on interest rates affect the working of monetary policy?