The Reserve Market- Macro Topic 4.6 (Part 2)

In this video I explain the difference between limited reserves and ample reserves and draw the reserve market. These are new concepts that may not be in your textbook, but are now on the AP Exam. More importantly, this is what monetary policy today looks like in real life. The answers to the pop quiz are in the first comment below. Let me know how you did on the quiz.

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Thanks for watching!

[JacobAClifford]

The answers to the practice multiple-choice questions are below. Just click on "Read more".



1. D
2. C
3. E
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[christian]

This man was single handedly the reason why I got a 5 on my AP test. To any new students or the 22-23 school year buy the ultimate review packets and youll be set for the year.

[so_obsessed_]

I just love that my teacher didn't even mention that this was something we should know.
To be honest, I'm not even sure how much he knows about econ. If you ask him a question he'll say "I don't know, " "I'm going to leave that to you to figure out, " or "Google it." Or he googles it himself and then just says it's not important if he can't find a good explanation.

[asifmcc]

Heyy Mr Clifford, thank you so much for your videos. I could understand the basic concepts of Micro and Macro econ because of you, and I recommended your channel to my friends as well. They all were benefited too.

Exam went well! Kudos to you, man. Lots of love.

[glennwatson]

This is a very good explanation. Are you sure AP Central is going to ask about this on the exam in light of the fact it is not in the textbooks yet? I have the 2019 Krugman textbook, 3rd edition and it is not there. Its does not seem fair for the College Board to ask about this.

[saifalsharif]

Thank you Mr. Clifford we needed this ❤

[MrSinn]

Awesome video! Love the always sunny reference

[JJ-kizf]

4:47 Starts talking about ample reserves ur welcome

[rrss]

Thank you Mr Clifford this will help me solve the mystery of the abbey

[Peachcreekmedia]

The reserve has little influence these days. What I learned about the Fed in graduate econ is basically obsolete.

[speerso]

thank you for this video! On quiz question 3, if the expansionary policy shift AD right, which would increase price levels, how does that cause real income to increase? thanks for all you do!!!

[georgebell]

For the third question, why does the real income go up? In my mind, the expansionary policy increases AD, thus increasing price level (Inflation). At that point, Nominal wage minus the higher rate of inflation will equal a smaller real income.

[kozmosnotgay]

What about the supply curve? how does the fed control that? Open Market Operations?

[frazzli]

i'm a little confused about the idea of "demand for reserves"-- if we're talking about this graph showcasing quantity of reserves deposited at the central bank at different policy rates, demand for reserves means banks' demand for reserves from the central bank? so if the discount rate is lower than the policy rate, they're more likely to demand reserves from the central bank? but then q of reserves in the central bank is higher? or is it quantity supplied? i'm falling into a vortex of confusion.

[aaryankamdar]

Question 1) A
Question 2) C
Question 3) E