Unit 5: Money, Banking, and Monetary Policy
Monetary policy includes the methods government agencies, such as the U.S. Federal Reserve, engage in to encourage banks, businesses, and individuals to change their interest rates, the supply of money, and the demand for money. Money serves as a medium of exchange, a store of value, and a unit of account. These three functions enable individuals to avoid a bartering system (we pay a business money for providing a service, rather than with a goat or loaf of bread). The ways we use to define and measure money are important to managing an economy. Savings and investment are key elements within the circular flow model and are a function of interest rates.
Completing this unit should take you approximately 11 hours.
5.1: Money and the Money Creation Process
5.2: Structure and Powers of the Federal Reserve System
5.3: Financial Markets
5.4: Monetary Policy and the Interest Rates