Blog Assignment on Unit Four Videos

First Video : http://www.youtube.com/watch?v=YLsrkvHo_HA&feature=results_video&playnext=1&list=PL2CB281D126F65E26

• Commodity money are goods that have other purposes that allow for trade, representative money are thinks like the gold system that backs the money, and then there is fiat money, which is money that is accept because the government says it is money. These are the types of money. The functions of money are to act as medium of exchange, to store value, and to be a unit of account. By being a unit of account, it allows us to judge what something is worth in terms of value or quantity.

Second Video : http://www.youtube.com/watch?v=gzFdeM6lUno&feature=bf_prev&list=PL2CB281D126F65E26&lf=results_video

• In the money market, in terms of money, the price paid for or to get money is the interest rate, which is the y-axis on the money market graph. On the x-axis, it is the quantity of money. Demand for money will always slow down, because when prices are increased, the quantity of demand will decrease meaning the interest rate will decrease, allowing for people to borrow more. The supply of money will always be vertical, because it doesn't vary upon interest rate, it is fixed and set by the Fed. The Fed will always want to stabilize interest rate because if it is unstable, then they cannot predict the level of investment or consumer spending that will help manipulate AD to give us the kind of economy we want.

Third Video : http://www.youtube.com/watch?v=XJFrPI8lLzQ&feature=bf_next&list=PL2CB281D126F65E26&lf=results_video

• What the Fed does to manipulate money supply is either increase or decrease required reserves, discount rate, or the buying or selling of bonds and securities. Required reserves is the percentage of total bank deposit that the bank has to hold on to. Discount rate is the rate at which banks can borrow money from the Fed overnight. The buying and selling of bonds affects the money supply, because if the government buys bonds, the public gets the money and thereby this increases the money supply. On the other hand, if the government sells bonds, the public will buy it and so the Fed keeps the money, causing the money supply to decrease.

Fourth Video : http://www.youtube.com/watch?v=rdM44CC0ELY&feature=bf_next&list=PL2CB281D126F65E26&lf=results_video

• Loanable Funds is the money available in the banking system for the people to borrow from. if the interest rate is down then there is more demand in the money, whereas if it is increased, the demand for money would be lower. The supply of loanable funds comes from the amount of money the people have in their bank, which is dependent on savings. Even though in the AD/AS graph, savings is a leakage, in LF, savings is good because the more money people save, the more money banks have to loan out, thereby increasing the money supply.

Fifth Video : http://www.youtube.com/watch?v=1tUC59pz95I&feature=bf_next&list=PL2CB281D126F65E26&lf=results_video

• In the money creation process, banks create money by making loans from their excess reserves. The less that's in the required reserves there are, the more excess reserves there will be. Because there is more excess reserves, more money can be lent out to people. By lending out more money, the money supply would increase. If banks keep a portion of their excess reserves, it would reduce the total amount in the money supply

Sixth Video : https://www.youtube.com/watch?v=k37Y6BKcpsY&index=8&list=PL2CB281D126F65E26

• There is a connection between the money market, loanable funds market, and the AD/AS graph. Let's say the government is experiencing a deficit. In order to fix it, they decide to borrow more money. In doing so, the demand for money is increased in the money market graph as well as the demand for loanable funds in the loanable funds graph. Aggregate demand would increase in the AD/AS graph. Each market experiences an increase from the demand side. The change in the supply of money implies a change in prices. The Fisher Effect tells us that if there is an increase in interest rate, then the price level would go up as well.