Real and nominal returnCalculating real return in last year dollarsNominal interest, real interest, and inflation calculationsRelation between nominal and real returns and inflationIndexing and its limitationsLesson summary: nominal vs. real interest rates
Money supply: M0, M1, and M2Functions of moneyStandard of deferred payment and legal tenderCommodity money vs. Fiat moneyWhen the functions of money break down: HyperinflationHyperinflationLesson summary: definition, measurement, and functions of money
Overview of fractional reserve bankingMoney creation in a fractional reserve systemWeaknesses of fractional reserve lendingFull reserve bankingSimple fractional reserve accounting (part 1)Simple fractional reserve accounting (part 2)Lesson summary: banking and the expansion of the money supply
In this unit, you'll learn about the financial sector and monetary policy. By knowing the definition of money and other financial assets, you'll be able to explore how the money market and the loanable funds market determine equilibrium nominal and real interest rates. Want to know more about central banks’ monetary policies and the effects of monetary policy actions? Explore this unit to find out!