The central bank (Federal Reserve Bank in the U.S.) engages in demand management by controlling the money supply. Today we will study the tools that the Fed and other central banks can use to do this. You should have read the text chapter identified below in the homework section and watched the related videos. We will start class today with you working cooperatively with a partner to find a solution to the "Problem of the Day" and then there will be a lecture on our next topic. This page contains all the information you need for today's class: homework, the problem of the day, helpful resources (videos, podcasts, etc.) and an explanation of the activities we will do in class. Use the table of contents on the right to help you navigate.
Watch the following video.
Problem of the Day
Define theory of liquidity preference.
Explain how the supply of money is determined.
Explain why the money demand curve slopes down.
Lecture
Related Readings
Three days that saved the world financial system
Chairman Bernanke Should Listen to Professor Bernanke
Japanese Monetary Policy: A Case of Self-Induced Paralysis by Ben Bernanke
Alan Greenspan on His Fed Legacy and the Economy