Macro 4.1- Money Market and FED Tools (Monetary Policy)

The video tutorial by Mr. Clifford on ACDC Econ covers the basics of monetary policy, focusing on the money market graph, which illustrates the supply and demand for money. It explains the reasons for money demand, such as transactions and liquidity preference, and the role of the Federal Reserve in supplying money. The tutorial also covers the impact of interest rates on money demand and the tools used by the Fed to adjust the money supply, including the reserve requirement, discount rate, and open market operations. The video emphasizes understanding interest rates as key to grasping monetary policy.

Describe the three tools the Fed uses to adjust the money supply.

How does changing the reserve requirement affect the money supply?

What is the significance of open market operations in monetary policy?