About This Chapter
CSET Business - Macroeconomics: Money, Federal Reserve System & Banking: Chapter Summary
Learn about the three types of money - commodity money, representative money and fiat money - and their four basic functions through our chapter on money, the Federal Reserve System and banking. This series of video lessons can help you prepare for the California Subject Examinations for Teachers (CSET) Business Subtest II. Additional subjects addressed in this chapter include the following:
- Money supply and market demand curves
- The multiplier effect and the simple spending multiplier
- The Federal Reserve System
- Fractional reserve banking
- Reserve requirement, open market operations and the discount rate
- Money demand and interest rates
- Quantity theory of money
CSET Business - Macroeconomics: Money, Federal Reserve System & Banking Objectives
Men and women who want to work as high school business teachers in California public schools must earn their credentials through the state's Commission on Teacher Credentialing. Part of this process includes passing the CSET Business Single Subject Exam, which features the CSET Business Subtest II. This subtest comprises 40 multiple-choice questions - 15 of which are economics-focused - and two constructed-response questions.
You might begin exploring this chapter on money, the Federal Reserve System and banking by taking the self-assessment quizzes associated with each lesson. This can give you an idea of where your skills are strong - and where you could use a little help. Then, watch the videos and take the quizzes a second time to see if you can improve your scores.
1. What is Money? - Definition and Types
In this lesson, you'll learn what money is and its four basic functions. You'll also take a look at how it benefits society and explore the different types of money.
2. The Four Basic Functions of Money
This lesson uses real-world examples to describe the four basic functions that money serves in an economy. These basic functions help to create the foundation of the money system.
3. The Money Market: Money Supply and Money Demand Curves
This lesson explores an economic model describing the supply and demand for money in a nation, referred to as the money market. It also describes the central bank's role in controlling the money supply, which impacts interest rates and the greater economy.
4. The Multiplier Effect and the Simple Spending Multiplier: Definition and Examples
When money is spent in an economy, this spending results in a multiplied effect on economic output. This lesson explains the multiplier effect and the how to use the simple spending multiplier to calculate it.
5. What is the Federal Reserve System?
Have you ever wondered why interest rates go up and down, seemingly at random? Of course you have! Discover what the Federal Reserve is, what its goals are and how those goals are achieved in this introductory lesson explaining the central bank of the United States.
6. Fractional Reserve System: Required and Excess Reserves
This lesson provides an overview of basic banking concepts, illustrating how deposits turn into required reserves and excess reserves. It also covers how a bank accounts for these items on its balance sheet.
7. How Money Is Made: Understanding Bank Lending in the Economy
In this lesson, you'll learn how a single deposit in a local bank increases the money supply and filters through the economy with the help of the fractional reserve banking system.
8. Reserve Requirement, Open Market Operations and the Discount Rate
This lesson outlines the three main tools used by the central bank to conduct monetary policy, including open market operations, required reserves and the discount rate.
9. Money Demand and Interest Rates: Economics of Demand
Learn about the differences between money, wealth and income and explore the factors that determine the demand for money in an economy. Take a look at the demand curve for money as well.
10. Quantity Theory of Money: Output and Prices
This lesson explains the quantity theory of money and how to apply it, including the idea that an increase in the money supply leads to inflation in the long run.
11. Money and Multiplier Effect: Formula and Reserve Ratio
In this lesson, explore the concept of the multiplier effect and the money multiplier. Then, learn the formula for calculating changes in the money supply.
Earning College Credit
Did you know… We have over 160 college courses that prepare you to earn credit by exam that is accepted by over 1,500 colleges and universities. You can test out of the first two years of college and save thousands off your degree. Anyone can earn credit-by-exam regardless of age or education level.
To learn more, visit our Earning Credit Page
Transferring credit to the school of your choice
Not sure what college you want to attend yet? Study.com has thousands of articles about every imaginable degree, area of study and career path that can help you find the school that's right for you.
Other chapters within the CSET Business Subtest II (176): Practice & Study Guide course
- CSET Business - Accounting Principles
- CSET Business - Principles of Finance
- CSET Business - Personal Finance
- CSET Business - Economic Concepts
- CSET Business - Microeconomics
- CSET Business - Macroeconomics: General Concepts
- CSET Business - Macroeconomics: Unemployment & Inflation
- CSET Business - Macroeconomics: Fiscal and Monetary Policy
- CSET Business - International Economics
- CSET Business Subtest 2 Flashcards