What is money?

That may seem like a really simple question, but it’s actually kind of complicated. Paper bills and coins, or currency, is obviously money. But it doesn’t end there.

Technically, “money” is anything that is a widely accepted means of...

Inflation can throw a kink in your savings plans. To accurately know your rate of return, you need to do a little more than calculate what you’ll receive off of the nominal interest rate.

First off, returns on savings are taxed. Depending on where you...

Imagine that we’re in the late 1920s in the United States. Times are great. World War I is behind us and we’re in the early days of the “Golden Age of Hollywood.” Jazz music is blossoming. Automobiles are new and novel. As Art Deco style peaks, there’s...

What happens when aggregate demand shifts because of a change in the velocity of money? You’ll recall from earlier videos that an increase or decrease in velocity means that money is changing hands at a faster or slower rate.

Changes in velocity are...

In this video, we explore how rapid shocks to the aggregate demand curve can cause business fluctuations.

As the government increases the money supply, aggregate demand also increases. A baker, for example, may see greater demand for her baked goods,...

Imagine you’re an employer during a recession, and you desperately need to cut labor costs to keep your firm afloat. Are you more likely to cut wages across the board for all employees, or institute layoffs for only some?

While it may seem that wage cuts...

We previously discussed how economic growth depends on the combination of ideas, human and physical capital, and good institutions. The fundamental factors, at least in the long run, are not dependent on inflation. The long-run aggregate supply curve,...

The aggregate demand-aggregate supply model, or AD-AS model, can help us understand business fluctuations. We’ll start exploring this model by focusing on the aggregate demand curve.

The aggregate demand curve shows us all of the possible combinations of...

In response to the 2008 financial crisis, the Fed employed some new instruments and approaches to getting the economy back on track. In this video we explore three of these: quantitative easing, paying interest on reserves, and conducting repurchase (and...

In the United States, the Federal Reserve controls the supply of money. This makes it a pretty massive player in the US – and world – economy.

The Fed can use the money supply and interest as tools to influence aggregate demand. But how the Fed does this...