AP Unit XI: Financial Markets

A. Money, banking, and financial markets (Unit 11 Scales)
1. Definition of financial assets: money, stocks, bonds
2. Time value of money (present and future value)
3. Measures of money supply
4. Banks and creation of money
5. Money demand
6. Money market and the equilibrium nominal interest rate
B. Loanable funds market
1. Supply of and demand for loanable funds
2. Equilibrium real interest rate
3. Crowding out
C. Central bank and control of the money supply
1. Tools of central bank policy
2. Quantity theory of money
3. Real versus nominal interest rates

Topics: Savings and Investment, Financial v. Capital Investment, M1, TVM, Banking and Money Creation, Money Multiplier, The Federal Reserve, Money Market, Loanable Funds Market
Readings: Module 22, 23, 25, 28, 29

What is Money?
Creating Money
The Fed
Monetary Policy

Practice Problems
Unit 11 Answer Sheet