Macro Unit 4 Intro- Money and Monetary Policy (AP Macroeconomics)

This video tutorial provides an overview of macroeconomics, focusing on monetary policy. It begins by discussing the nature and functions of money, including M1, M2, and M3. The tutorial then covers banking basics, such as balance sheets and financial assets. The core of the lesson is on monetary policy, explaining how the money supply can influence the economy. It introduces the money market, the role of the Federal Reserve, and the concept of open market operations. The video concludes with an explanation of the money multiplier and the impact of interest rates on investment and consumption.

What are the three primary functions of money?

• Store of value, barter system, unit of account

• Medium of exchange, unit of account, store of value

• Medium of exchange, barter system, store of value

• Unit of account, barter system, medium of exchange

What is the main purpose of a balance sheet in banking?

• To determine the bank's customer satisfaction

• To display the bank's assets and liabilities

• To show the bank's profit and loss

• To calculate the bank's interest rates

How does the Federal Reserve influence the money supply?

• By setting tax rates

• By adjusting the barter system

• By controlling government spending

• Through open market operations

What happens to business investments when interest rates are high?

• Investments are unaffected by interest rates

• Investments decrease

• Investments increase

• Investments remain unchanged

What is the difference between nominal and real interest rates?

• Neither include inflation

• Nominal rates include inflation, real rates do not

• Real rates include inflation, nominal rates do not

• Both include inflation