SECTION 5 STUDY GUIDE MODULES 23-33

Transcription

1 SECTION 5 STUDY GUIDE MODULES 23-33

2 Reading Guide 20: Module (pp ) Module 23 The Meaning of Money The Meaning of Money The Financial Sector WHAT IS MONEY? ROLES OF MONEY Medium of Exchange Store of Value Unit of Account TYPES OF MONEY MEASURING THE MONEY SUPPLY Checking Your Understanding 2. Tackle the test: Multiple-Choice Questions

3 Module 24 The Time Value of Money The Concept of Present Value Borrowing, Lending, and Interest Defining Present Value Using Present Value Tackle the test: Multiple-Choice Questions Tackling the Test: Free-Response Question 1a 2a. b. b.

4 Reading Guide 21: Module 25 (pp ) Module 25 Banking and Money Creation The Financial Sector The Monetary Role of Banks WHAT BANKS DO Figure 25.1 Figure 25.2 BANK REGULATION Deposit Insurance Capital Requirements Reserve Requirements The Discount Window Determining the Money Supply HOW BANKS CREATE MONEY

5 Figure 25.3 RESERVES, BANK DEPOSITS, AND THE MONEY MULTIPLIER Table 25.1 How Banks Create Money THE MONEY MULTIPLIER IN REALITY Figure 25.4 The Monetary Base and the Money Supply Tackle the test: Multiple-Choice Questions Tackling the Test: Free-Response Question Remember to EXPLAIN Remember to EXPLAIN 1a 2a. b. b. c. c.

6 Reading Guide 22: Module 27 (pp ) Module 27 The Federal Reserve System: Monetary Policy The Financial Sector The Federal Reserve System THE FUNCTIONS OF THE FEDERAL RESERVE SYSTEM Provide Financial Svc Supervise & Regulate Maintain the Stability Conduct Monetary of Fin. Sys. Policy What the Fed Does THE RESERVE REQUIREMENT THE DISCOUNT RATE OPEN-MARKET OPERATIONS Figure 27.1 The Federal Reserve s Assets and Liabilities

7 The European Central Bank Tackle the test: Multiple-Choice Questions Tackling the Test: Free-Response Question 1a. Remember to Explain b.

8 Reading Guide 23: Module 28 (pp ) Module 28 The Money Market The Financial Sector The Demand for Money THE OPPORTUNITY COST OF HOLDING MONEY THE MONEY DEMAND CURVE Figure 28.1 The Money Demand Curve SHIFTS OF THE MONEY DEMAND CURVE Changes in the Aggregate Changes in Real GDP Changes in Technology Changes in Institutions Price Level

9 Money and Interest Rates THE EQUILIBRIUM INTEREST RATES TWO MODELS OF THE INTEREST RATE Tackle the test: Multiple-Choice Questions Tackling the Test: Free-Response Question 1. 2.

10 Reading Guide 24: Module 31 Module 31 Monetary Policy and the Interest Rate INFLATION, UNEMPLOYMENT, & STABILIZATION POLICIES Monetary Policy and the Interest Rate AP Exam Tip (p. 304) The Federal Funds Rate: The Discount Rate: Figure 31.2 Setting the Federal Funds Rate Monetary Policy and Aggregate Demand EXPANSIONARY AND CONTRACTIONARY MONETARY POLICY AP Exam Tip (p. 306) Figure 31.3 Expansionary and Contractionary Monetary Policy

11 Monetary Policy in Practice What the Fed Wants, the Fed Gets (p. 310) INFLATION TARGETING (p310) Checking Your Understanding (p311) Tackle the test: Multiple-Choice Questions (p311) Tackle the test: Free-Response Questions 2.

12 Reading Guide 25: Module 32 & 33 Module 32 Money, Output, and Prices in the Long Run INFLATION, UNEMPLOYMENT, & STABILIZATION POLICIES Money, Output and Prices Figure 32.1 SHORT-RUN AND LONG-RUN EFFECTS OF AN INCREASE IN THE MONEY SUPPLY MONEY NEUTRALITY CHANGES IN THE MONEY SUPPLY AND THE INTEREST RATE IN THE LONG RUN Figure 32.2

13 (p316) Checking Your Understanding 1. (p316) Tackle the test: Multiple-Choice Questions Module 33 Types of Inflation, Disinflation, and Deflation Money and Inflation THE CLASSICAL MODEL OF MONEY AND PRICES INFLATION TAX (OPTIONAL) THE LOGIC OF HYPERINFLATION (OPTIONAL) Moderate Inflation and Disinflation THE OUTPUT GAP AND THE UNEMPLOYMENT RATE (p316) Tackle the test: Multiple-Choice Questions