By the end of this section, you will be able to:
Explain the structure and organization of the U.S. Federal Reserve
Discuss how central banks impact monetary policy, promote financial stability, and provide banking services
By the end of this section, you will be able to:
Explain the various functions of money
Contrast commodity money and fiat money
By the end of this section, you will be able to:
Utilize the money multiplier formulate to determine how banks create money
Analyze and create T-account balance sheets
Evaluate the risks and benefits of money and banks
By the end of this section, you will be able to:
Contrast M1 money supply and M2 money supply
Classify monies as M1 money supply or M2 money supply
By the end of this section, you will be able to:
Explain how banks act as intermediaries between savers and borrowers
Evaluate the relationship between banks, savings and loans, and credit unions
Analyze the causes of bankruptcy and recessions
By the end of this section, you will be able to:
Explain the aggregate supply curve and how it relates to real GDP and potential GDP
Explain the aggregate demand curve and how it is influenced by price levels
Interpret the aggregate demand/aggregate supply model
Identify the point of equilibrium in the aggregate demand/aggregate supply model
Define short run aggregate supply and long run aggregate supply
By the end of this section, you will be able to:
Use the aggregate demand/aggregate supply model to show periods of economic growth and recession
Explain how unemployment and inflation impact the aggregate demand/aggregate supply model
Evaluate the importance of the aggregate demand/aggregate supply model
In this chapter, you will learn about:
Macroeconomic Perspectives on Demand and Supply
Building a Model of Aggregate Demand and Aggregate Supply
Shifts in Aggregate Supply
Shifts in Aggregate Demand
How the AD/AS Model Incorporates Growth, Unemployment, and Inflation
Keynes’ Law and Say’s Law in the AD/AS Model
By the end of this section, you will be able to:
Identify the neoclassical zone, the intermediate zone, and the Keynesian zone in the aggregate demand/aggregate supply model
Use an aggregate demand/aggregate supply model as a diagnostic test to understand the current state of the economy
By the end of this section, you will be able to:
Explain Say’s Law and understand why it primarily applies in the long run
Explain Keynes’ Law and understand why it primarily applies in the short run
By the end of this section, you will be able to:
Explain how imports influence aggregate demand
Identify ways in which business confidence and consumer confidence can affect aggregate demand
Explain how government policy can change aggregate demand
Evaluate why economists disagree on the topic of tax cuts
By the end of this section, you will be able to:
Explain how productivity growth changes the aggregate supply curve
Explain how changes in input prices change the aggregate supply curve
By the end of this section, you will be able to:
Explain crowding out and its effect on physical capital investment
Explain the relationship between budget deficits and interest rates
Identify why economic growth is tied to investments in physical capital, human capital, and technology
By the end of this section, you will be able to:
Discuss twin deficits as they related to budget and trade deficit
Explain the relationship between budget deficits and exchange rates
Explain the relationship between budget deficits and inflation
Identify causes of recessions
By the end of this section, you will be able to:
Explain the national saving and investment identity in terms of demand and supply
Evaluate the role of budget surpluses and trade surpluses in national saving and investment identity
By the end of this section, you will be able to:
Apply Ricardian equivalence to evaluate how government borrowing affects private saving
Interpret a graphic representation of Ricardian equivalence
