Video Summaries

Video #1
The three different types of money are commodity money, representative money, and fiat money.  A negative about representative money is that when the value changes it effects the value of the national currency.  Fiat money is money that is backed by the government who says it has value.  A function of money is that it is a medium of exchange.  The second function is that money is a store of value.  The last function is money is a unit of account. 

Video #2
On a money market graph the interest rate is on the "y" axis and the quantity is on the "x" axis.  Demand for money slopes downward because when the price is high, quantity demanded is low.  Supply of money is vertical because it does not vary based on the interest rate; the supply of money is fixed by the FED.  If the government wants to bring the interest rates back down, they can increase the money supply.

Video #3
Expansionary policy is easy money and contractionary policy is tight money.  If the FED wants to increase the money supply, then they will decrease the required reserves.  If the FED wants to decrease the money supply, then they would increase the required reserves.  The discount rate is the rate at which banks can borrow money from the FED.

Video #4
On the loanable funds graph, interest rate is on the "y" axis and quantity is on the "x" axis.  Supply of loanable funds comes from the amount of money that people have in banks.  Supply of loanable funds is dependent on savings.  If people have an incentive to save more, then the supply of loanable funds increases.  If the people have a disincentive to save less, then the supply of loanable funds decreases.

Video #5
Banks create money by making loans.  The reserve requirement is the percentage of the banks total deposits that they have to keep either as vault cash or on deposit in a FED branch.  The money multiplier is 1/RR.  If the reserve ratio is 20% then the amount a banking system can loan out from a $500 loan is $2500.  Use the reserve ratio (1/.2) which is equal to 5 and multiply that by $500.

Video #6
If the government is going through a deficit, they are borrowing money.  The majority of the government's debt id from borrowing money from Americans, not foreign countries.  There will be an increase in demand for money because the government is borrowing it.  In the money market graph the Demand for Money line will shift to the right based on the above scenario.