Week 9 · Readings & resources

Week 9 — Readings & Resources

Principles of Macroeconomics Free sample edition

Your primary reading is Chapter 9 (in this module). Everything below is the optional, go-deeper layer — pick what helps, skip the rest.

How to use this page

This page has 11 items (5 readings and 6 videos). Allow 69–82 minutes for everything. Each group points back to the matching chapter section and class-session segment, so use the full menu when you want more practice, or take the quick path below.

Every video here has captions: turn them on with the CC button in the player. The chapter covers the same ideas in text.

Pick-one quick path (19–21 min total)

① What makes something money?

Chapter 9, Section “Name the three jobs money does” · Session 1, Segment 1, “The three jobs money does” · Remember: money is whatever people generally accept in payment, and it does three jobs: medium of exchange, store of value, and unit of account.

Money and Finance: Crash Course Economics #11 — CrashCourse — a fast, funny tour of what money is, why a society moves past barter, and the three jobs money does; watch the first half for the three jobs and sort each of the episode's examples into one of them. Use it while completing the Week-9 module overview. (video, 11 min) (captions: creator)
Functions of Money — Federal Reserve Education — a short audio lesson with a transcript on the jobs money does, the problem barter creates, and why some things have worked better as money than others; read the transcript through the three functions and the barter example, and skip the later comparison of forms of money if you are short on time. (reading, 5–8 min)

② Counting the money supply in layers

Chapter 9, Section “Measure the money supply: M1, M2, and the monetary base” · Session 1, Segment 3, “M1, M2, and the monetary base” · Remember: the monetary base is currency plus bank reserves, and M1 and M2 are the larger money supply that bank lending builds on top of it.

M1 and M2 Money Supply Explained (The Easy Way) — Think Econ — a quick walk through the layers of the money supply, from the most spendable money outward; watch for what M1 holds and what M2 adds, and skip the part about wider measures beyond M2, which this course does not use. (video, 4 min) (captions: automatic)
What is the money supply? Is it important? — Board of Governors of the Federal Reserve System — the Federal Reserve's own one-page answer that defines the monetary base, M1, and M2; read it with the chapter's building picture in mind and name which layer is the foundation. (reading, 2–4 min)

③ From one deposit to a chain of loans

Chapter 9, Section “Sum the chain with the money multiplier” · Session 2, Segment 6, “The money multiplier” · Remember: each bank keeps its required reserves and lends the excess, and the chain of new deposits sums to at most 1 divided by the required reserve ratio times the first deposit.

How Banks Create Money - Macro Topic 4.4 — Jacob Clifford — a fast whiteboard lesson on a bank keeping part of a deposit, lending the rest, and the loan coming back as someone else's deposit; pause after each bank and check the split against the chapter's ledger. (video, 4 min) (captions: automatic)
Macro Minute -- The Money Multiplier — You Will Love Economics — a three-minute review of the money multiplier as 1 divided by the reserve requirement and how to use it on a new deposit; as you watch, keep it apart from the spending multiplier. This builds on Week 7's work with the spending multiplier. (video, 3 min) (captions: automatic)
Macro 4.4B - Expansion of the Money Supply - How does the Money Multiplier Work? — ReviewEcon — a longer, practice-style lesson that runs a deposit through several rounds and then uses the multiplier to find the largest possible change in deposits; work each practice problem yourself before the reveal. (video, 11 min) (captions: automatic)

④ A ceiling, not a forecast

Chapter 9, Section “Treat the money multiplier as a ceiling, not a forecast” · Session 2, Segment 7, “Why the multiplier is an upper bound” · Remember: the multiplier is the most the chain can grow, and extra reserves, cash held outside banks, and zero required ratios keep real money creation far lower.

Reserve Requirements — Board of Governors of the Federal Reserve System — the Federal Reserve's page on reserve requirements, including the change that set the required ratios to zero; read the opening paragraphs and skip the historical tables and the list of regulatory changes. (reading, 4–6 min)
Monetary Policy, Money, and Inflation — Federal Reserve Bank of San Francisco — a short research letter, written after a stretch when banks piled up reserves, on why the money supply did not grow in step with the monetary base; read only the first section, on the monetary base and the money stock, and notice how far the real ratio fell below any classroom multiplier. (reading, 4–6 min)
How Commercial Banks Really Create Money (the Money Multiplier is a MYTH). — Money & Macro — one economist's forceful case that the classroom multiplier misdescribes how modern banks lend, and that loan demand and bank rules set the real limits; it argues one side of a debate about how best to teach banking, so set it beside the chapter's classroom model and note where both agree that the multiplier is no forecast. (video, 13 min) (captions: creator)

Optional one-stop reference (free online reference)

Money Supply, Concise Encyclopedia of Economics — Econlib — a reference entry on how the money supply is measured and how the banking system expands it; read the opening parts on M1, M2, the monetary base, and the multiplier, and skip the historical sections and any discussion of central-bank policy. (reading, 8–12 min)

Heads-up (links rot): these point to outside sites that occasionally move or rename pages. If a link ever fails, tell your instructor and use the reference above in the meantime.

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