Unit 5: Monetary Policy
This unit will teach you how economists think about money. For economists, money is something that produces money services: any commodity, document, token, or claim that can be used as a medium of exchange and that people demand for that purpose. If the value of a given asset rises because people demand its services, we call that asset "money" or "money assets". Over time, as different demands for money services arise, new instruments emerge to supply those services. This unit looks at the different motives for demanding money and different forms used to supply the demand. We also explore the role of institutions in regulating money.
Completing this unit should take you approximately 19 hours.
Upon successful completion of this unit, you will be able to:
- build macroeconomic models to describe changes over time in monetary and fiscal policy;
- analyze the role of government in allocating scarce resources;
- explain and use the basic tools of macroeconomic theory, and apply them to help address problems in public policy; and
- explain how inflation affects entire economic systems.
5.1: Overlapping Generations Model
Read Chapter 8 on pages 172–175. Think about how this tool explains the transfer of wealth over generations.
5.2: Monetary Policy and Inflation
Read Chapter 8 on pages 175–194. Think about how the role of money functions within an economy. Consider which policies work best in isolation and which are best used in an open economy.
5.3: International Monetary Systems
Read Chapter 8 on pages 194–205. Think about how the international monetary system functions and how it might be in need of reform.
Unit 5 Assessment
- Receive a grade
Take this assessment to see how well you understood this unit.
- This assessment does not count towards your grade. It is just for practice!
- You will see the correct answers when you submit your answers. Use this to help you study for the final exam!
- You can take this assessment as many times as you want, whenever you want.
