CO 102 WEEK 9 DISCUSSION Discussion 1 â€œBanking and the Money Supplyâ€ Please respond to the following: a) Explain in simple terms (yet covering all important steps) how banks create money. b) Discuss the FedÂ’s tools for controlling the monetary supply and how well you believe they work. Provide examples to support your response. Discussion 2 â€œMonetary Theory and Policyâ€ Please respond to the following: a) Compare how changes in the money supply affect aggregate demand in the short run against how it affects aggregate demand in the long run. b) In terms of monetary policy, discuss whether the Fed should focus on the interest rates in the short run or on the supply of money in the long run. Explain your rationale in your response.