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Notes -
#2 is incorrect. Prices of a thing are a function of supply and demand, not the value of the thing and the value of a dollar. First, things do not have values; they have prices. Eg: Gasoline prices, after all, go up and down even as the value remains constant. Perceived value can affect demand (which is the willingness and ability to buy different amounts of a product at different prices, so it can affect willingness, but really that is just part of utility. Second, the "value of a dollar" doesn't mean much: it is a vernacular term commonly used to refer to prices; saying "the value of the dollar has shrunk since I was a kid" is simply a way of saying that prices have gone up. Changing the supply of money does affect prices, including the price of borrowing money (ie, interest rates), but its effect on consumer prices is really more about its effect on aggregate demand (see #4)
#3 is irrelevant, per above. The price of a dollar relative to other currencies is a function of supply and demand for each currency, which in part is a function of trade imbalances.
#4, since currency is only about 10 percent of the money supply, the government rarely prints money in order to adjust the money supply. Rather. the fed tries to affect inflation by adjusting interest rates, changing bank reserve requirements, and buying and selling bonds. Total demand in an economy consists of 1) consumer demand; 2) business demand; 3) government demand (expenditures - income); and 4) Net foreign demand (exports - imports). When the Fed raises interest rates it charges banks, banks borrow less from the Fed and hence loan less to businesses, thereby reducing business demand. Also, banks charge higher interest on loans (there is a lower supply of money available to lend, so the price of a loan -- the interest rate -- rises). When the Fed buys outstanding bonds, there is more money in the hands of consumers or businesses (whomever held the bonds), so demand rises. To reduce demand, the Fed tries to sell more bonds. Bank reserve requirements are discussed below.
#5: Suppose a bunch of us go to Mars. I am the only one with money ($10,000 in cash). Money supply is now $10,000. I deposit it into your bank and open a business. Since the business is not drug dealing, I pay my suppliers by check, not in cash. So, I open a checking account. You are a bank. You make money by lending it out. Suppose you lend $9000 to Joe to start his business. He does not want cash; rather you open a checking account for Joe, and write "$9,000" in his account ledger. Joe now can write checks up to $9,000, and I can write checks up to $10,000, so the money supply is now $19,000. That is how fractional reserve banking affects the money supply. Changing the reserve requirement or otherwise discouraging or encouraging lending changes how big that part of the money supply is.
#6 - See discussion of bonds above. If govt borrows money to spend it, not much happens: Consumer/business demand drops, but govt demand rises. If govt borrows money and sits on it, then aggregate demand declines.
#8 - The govt wants to avoid deflation because it creates the risk of recession; When there is deflation, rational consumers delay big ticket purchases in hopes of paying less in the future. That reduces demand, leading to layoffs, which leads to more reduced demand and even more deflation, and the process accelerates.
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