AP®︎ Macroeconomics Unit 4: Notes & Study Guide
Prepare for your quiz, test, or the AP exam with a comprehensive review on Unit 4 of AP Macroeconomics – Financial Sector.
Unit 4: Financial Sector
This unit explores the role of the financial sector, including how banks create money, the money market, and how central banks conduct monetary policy.
Begin with Topic 4.1: Financial AssetsTo review Unit 4, go through each of the 7 topics below.
Everything you actually need to know for your Unit 4 test, pulled directly from the AP® Macroeconomics curriculum.
Financial Assets
Financial Assets
- What Financial Assets Are
- The Main Types of Financial Assets
- The Opportunity Cost of Holding Money
Nominal v. Real Interest Rates
Nominal v. Real Interest Rates
- Nominal and Real Interest Rates
- The Fisher Equation and How to Calculate Interest Rates
- Expected vs. Actual Inflation and Who Wins
Definition, Measurement, and Functions of Money
Definition, Measurement, and Functions of Money
- What Money Is
- The Three Functions of Money
- Measuring the Money Supply
Banking and the Expansion of the Money Supply
Banking and the Expansion of the Money Supply
- How Banks Create Money Through Fractional Reserve Banking
- Bank Balance Sheets
- The Money Multiplier and Maximum Expansion
Monetary Policy
Monetary Policy
- What Monetary Policy Is
- The Tools of Monetary Policy
- How Monetary Policy Affects the Economy
The Loanable Funds Market
The Loanable Funds Market
- The Loanable Funds Market
- Demand and Supply of Loanable Funds
- National Saving in Closed and Open Economies
Notes
1 credit used · 5/5 remaining