By the end of this section, you will be able to:

Contrast expansionary monetary policy and contractionary monetary policy
Explain how monetary policy impacts interest rates and aggregate demand
Evaluate Federal Reserve decisions over the last forty years
Explain the significance of quantitative easing (QE)

By the end of this section, you will be able to:

Analyze whether monetary policy decisions should be made more democratically
Calculate the velocity of money
Evaluate the central bank’s influence on inflation, unemployment, asset bubbles, and leverage cycles
Calculate the effects of monetary stimulus

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 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