1.Some economists think that the central banks should try to prick bubbles in the stock market before theyget out of hand and cause later damage when they burst. How can monetary policy be used to...

1.Some economists think that the central banks should try to prick bubbles in the stock market before theyget out of hand and cause later damage when they burst. How can monetary policy be used to prick a bubble? Explain how it can do this using the Gordon growth model.

2. “Forecasters’ predictions of inflation are notoriously inaccurate, so their expectations of inflation cannot be rational.” Is this statement true, false, or uncertain? Explain your answer.