About This Chapter
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- Test your understanding of each lesson with short quizzes.
- Verify you're ready by completing the Money, Banking and Financial Markets chapter exam.
Why it works:
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Students will review:
This chapter helps students review the concepts in a Money, Banking and Financial Markets unit of a standard college-level principles of macroeconomics course. Topics covered include:
- Measuring the money supply
- Four basic functions of money
- Fractional reserve system
- How money is made
- Money and the multiplier effect
1. Types of Financial Assets: Money, Stocks & Bonds
For an economy to operate effectively, consumers and businesses need a common medium of exchange and mechanisms to encourage some people to save, others to borrow and others to invest. In any modern economy, these needs are met with money, stocks and bonds.
2. Present and Future Value: Calculating the Time Value of Money
A central concept in business and finance is the time value of money. We will use easy to follow examples and calculate the present and future value of both sums of money and annuities.
3. Measuring the Money Supply: Explanation and Examples
Discover how the Federal Reserve defines the money supply by exploring the components of the money stock. In this lesson, we also look at the money supply in terms of function and liquidity.
4. 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.
5. 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.
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. 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.
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. 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.
11. The 5 C's of Credit
What's your creditworthiness? When a business owner needs a loan from the bank or financial institution, they will go through an evaluation process to determine their eligibility. Business owners need to consider what financial institutes look at. In this lesson you will learn about the process known as the 5 C's of credit.
12. What Are Commercial Banks? - Definition, Roles & Functions
You may not realize it, but there are different types of banks and not all banks are authorized to do the same things. In this lesson, you'll learn about commercial banks, including their role and function in an economy. A short quiz follows.
13. The Circular Flow of Income: Definition & Model
In this lesson, we will look how the circular flow of income works. We will look at key terms, the roles of households and firms, and some exceptions to the model in terms of leakages and injections. A summary and quiz will conclude the lesson.
14. The Functions and Characteristics of Money
Money makes the world go around. In this lesson, we will learn more about money. We will break it down into its separate functions and look closer at its many characteristics.
15. What is the Gold Standard? - Definition & History
This lesson will give an explanation of the economic principle of the gold standard, and its differing variations. We will also conduct a brief history of the usage of the gold standard.
16. What is the Dow Jones Industrial Average? - History & Performance
Few numbers come as close as the Dow Jones Industrial Average in giving us a quick look at how the economy is doing. But what is the Dow? This lesson explains its history.
17. Currencies of the World
Every country has some form of money it uses. In this lesson, we are going to explore some of the most powerful currencies in the world and see how they relate to each other.
18. Accounting vs. Economic Costs: Examples & Comparison
It's easy to identify costs associated with running a business - labor, materials, rent, and advertising. These are all accounting costs, and in this lesson, we'll discuss how they compare to economic costs, and why it matters.
19. Rolled Throughput Yield (RTY): Definition & Formula
In this lesson we will define throughput yield. We will also explore the different uses of this calculation typically used in manufacturing and apply it to the financial services industry.
20. Roll Yield: Definition, Strategy, Calculation & Example
This lesson defines roll yield and other key concepts of futures contracts needed to fully understand the calculation including backwardation and contango.
21. Herd Behavior and Investment in Financial Markets
This lesson explains why humans are prone to herd behavior in financial markets by discussing a few human biases like social proof and incentive-caused bias. You'll also learn about steps you can take prevent being 'swept' away by a group.
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Other chapters within the Introduction to Macroeconomics: Help and Review course
- The Production Possibilities Curve: Help & Review
- Comparative Advantage, Specialization and Exchange: Help and Review
- Demand, Supply and Market Equilibrium: Help and Review
- Measuring the Economy: Help and Review
- Inflation Measurement and Adjustment: Help and Review
- Understanding Unemployment: Help and Review
- Aggregate Demand and Supply: Help and Review
- Macroeconomic Equilibrium: Help and Review
- Inflation and Unemployment: Help and Review
- Economic Growth and Productivity: Help and Review
- Central Bank and the Money Supply: Help and Review
- Fiscal and Monetary Policies: Help and Review
- Foreign Exchange and the Balance of Payments: Help and Review
- Inflows, Outflows, and Restrictions: Help and Review
- Government & the Economy: Help and Review
- The U.S. Economic System