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Ch 35: PLACE Business Education: The Central Bank and Monetary Policy

About This Chapter

The short, engaging videos found in this chapter outline some key information about the central bank and monetary policy. You'll need to know this information to be adequately prepared for the PLACE Business Education exam.

PLACE Business Education: The Central Bank and Monetary Policy - Chapter Summary

The lessons in this chapter will cover general policy dealing with the Federal Reserve, as well as interest rates and investment procedures. You'll get a chance to study other topics related to the central bank and monetary policy that will appear on the PLACE Business Education exam, such as:

  • Overview of the Federal Reserve System
  • Open market operations
  • Money supply
  • The relationship between banks and the Federal Reserve
  • How interest rates are affected by the Federal Reserve
  • Quantity theory of money and the velocity of money
  • Real and nominal interest rates
  • Inflation, investment and the consumer price index

Our qualified instructors take you through each subject in detail. After reviewing a lesson in its entirety, you can look over the video transcript and the after-lesson quiz to see if you missed any information. You can then view the video again, or jump around to its main topics using the video tags.

PLACE Business Education: The Central Bank and Monetary Policy Chapter Objectives

The PLACE Business Education exam covers five subareas, including a section on Economics and Personal Finance. This section will ask you questions on general monetary policy, as well as specifics about the Federal Reserve and its relationship to business--all of which is covered in this chapter. All of the questions are multiple choice. You can preview the types of questions that will appear on the test by taking our end-of-lesson quizzes.

11 Lessons in Chapter 35: PLACE Business Education: The Central Bank and Monetary Policy
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 PLACE Business Education: Practice & Study Guide course

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