a. Explain what is meant by the time inconsistency problem of monetary policy. Why does it arise? Can it be solved? (5 points) b. According to theory discussed in the course, we should treat currencies as financial assets in the short run. How is the nominal exchange rate determined according to this theory? Explain which factors affect the decision of an investor considering investing in a given currency. (5 points) c. Consider the search and matching model discussed in the course. The Beveridge curve, the job-creation condition and the wage setting curves, respectively, are given by: u= λ + 0q (0) (r+λ)pc p-w- = 0, q(0) w = (1-B)z + Bp(1 + c0). Analyse the effects of an increase in z. (5 points)