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Ch 77: NMTA: Central Bank & the Money Supply

About This Chapter

Use these lessons to refresh your understanding of how the Federal Reserve System works as well as about theories involving the money supply. Our videos can help you prepare for questions on the NMTA Social Science exam.

NMTA: Central Bank & the Money Supply - Chapter Summary

Dust off your knowledge of the role of the Federal Reserve System, theories on the money supply and the influence of monetary policy on the economy. Our lessons and quizzes may help you handle questions on the following topics when you take the NMTA Social Science exam:

  • Responsibilities of the Federal Reserve System
  • Reserve requirement, open market operations and the discount rate
  • The reserve ratio and its impact on the money supply
  • How banks borrow money from the federal reserve
  • The quantity theory of money
  • Real and nominal interest rates
  • Velocity of money
  • Relationship between the money supply and the Consumer Price Index

Our expert instructors have packed these lessons with real world examples that make the concepts understandable. If you still have questions, feel free to contact the instructor for some personalized help.

Objectives of the NMTA: Central Bank & the Money Supply Chapter

All New Mexico teachers seeking certification in social science must take the NMTA Social Science exam. The exam has four sections, and questions on the ideas this chapter covers are in the section on economics, which accounts for 12% of the exam's total scoring.

All the exam's questions are multiple choice and administered by computer. The brief quizzes that are paired with our video lessons are in this format, so taking them can help you familiarize yourself with what you'll face on exam day. You'll also be able to gauge your knowledge and determine what topics might call for extra study.

11 Lessons in Chapter 77: NMTA: Central Bank & the Money Supply
Test your knowledge with a 30-question chapter practice test
What is the Federal Reserve System?

1. 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.

Reserve Requirement, Open Market Operations and the Discount Rate

2. 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.

Open Market Operations & the Federal Reserve: Definition & Examples

3. Open Market Operations & the Federal Reserve: Definition & Examples

This lesson explains the most frequently used monetary policy tool of the central bank, open market operations. Using examples, you'll go inside the formula of the money multiplier and see how the Federal Reserve effectively controls the interest rate of the economy.

How the Reserve Ratio Affects the Money Supply

4. How the Reserve Ratio Affects the Money Supply

Where does our supply of money come from. Well, it's in the hands of the Federal Reserve. In this lesson, discover how the central bank can dramatically alter the supply of money in the economy by changing the reserve requirements of the banks it oversees.

The Discount Rate & Monetary Policy: How Banks Can Borrow Money from the Federal Reserve

5. The Discount Rate & Monetary Policy: How Banks Can Borrow Money from the Federal Reserve

Learn more about the discount rate, which is the rate that banks pay to the central bank when borrowing money. This lesson explains how changes in the discount rate affect the money supply and how the central bank can use the discount rate as part of monetary policy.

How the Federal Reserve Changes the Money Supply and Affects Interest Rates

6. How the Federal Reserve Changes the Money Supply and Affects Interest Rates

Discover the connection between the money supply and economic output and how the central bank's tools lead to an increase or decrease in real GDP via expansionary and contractionary monetary policy.

Quantity Theory of Money: Output and Prices

7. 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.

The Velocity of Money: Definition and Circulation Speed

8. The Velocity of Money: Definition and Circulation Speed

Learn about the method economists use to measure how fast money changes hands throughout the economy, referred to as the velocity of money. With the help of an imaginative story, this lesson defines the concept of velocity as well as what determines it.

Real vs. Nominal Interest Rates and Changes in Prices

9. Real vs. Nominal Interest Rates and Changes in Prices

This lesson explains the important difference between nominal and real interest rates and provides examples of how to use the Fisher equation to adjust nominal rates for inflation.

Private Investment and Real Interest Rates

10. Private Investment and Real Interest Rates

When you borrow money, where does that money come from and why is it available? In this lesson, you'll learn about the market for loanable funds, where savers deposit money and entrepreneurs borrow money to finance private investment.

Hyperinflation, Money Supply and the Consumer Price Index

11. Hyperinflation, Money Supply and the Consumer Price Index

Is there such a thing as too much money? Maybe. What happens when inflation is excessive? This lesson explores what hyperinflation is and how it is connected with the money supply.

Chapter Practice Exam
Test your knowledge of this chapter with a 30 question practice chapter exam.
Not Taken
Practice Final Exam
Test your knowledge of the entire course with a 50 question practice final exam.
Not Taken

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Other Chapters

Other chapters within the NMTA Middle Grades Social Science (202): Practice & Study Guide course

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