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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Step 3: Enroll in the free version of the Macroeconomics packet

[@determinetruth362]

Why is 3 E?

[@aight_lol]

why is 2 C

[@troyyang]

@@aight_lol assuming it's an ample reserve banking system, increasing the ior makes banks lend out less and firms/consumers spend less, decreasing investment, thus decreasing AD. decreasing AD shifts it to the left, closes the inflationary gap, and reduces the price level

[@dhruvbah]

@@brianweitzelphotography5616 I'm confused as to why real income would increase instead of decrease. Wouldn't real income decrease because of the rise in price levels associated with the shift of AD to the right?

[@RideYourMoneyWave]

@@dhruvbah Real wages/income (not national income) would decrease, but this is a byproduct of the initial increase in AD resulting from an increase in Investment.

[@christian1499]

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.

[@aparnat.3513]

I completely agree! The ultimate review packet guarantees you a 5 for sure!

[@jvlogs296]

I did my AP in 2018 and easily got a 5 cuz of his videos. Also decided to study economics in university. Grateful to have come across this channel back in 2016-2017

[@ZainYasin-ze4sz]

Paid actor

[@dolfinw4179]

@@ZainYasin-ze4sz But we gotta appreciate his free videos.

[@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.

[@tessangynn]

i asked my teacher and he said i didn't need to know it.

[@so_obsessed_]

@@tessangynn the CollegeBoard website says it's on the exam.

[@ezanamedhin]

@@so_obsessed_ yeah my teacher said to watch this today in case it might be on the multiple choice or frq.

[@asifmcc2007]

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.

[@MrSinn]

Awesome video! Love the always sunny reference

[@sovietlunatic3084]

Bro i got a 5 on my AP psych exam, you're the goat bro

[@risinglabyrinth5977]

The crossover is crazy 😲Also Mr. Sinn, thanks for carrying HUG, you are the GOAT 🐐

[@saifalsharif2570]

Thank you Mr. Clifford we needed this ❤

[@glennwatson3313]

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.

[@georgebell1684]

College Board doesn't care about fair. That is why they have regularly ramped up the difficulty of the test over the last ten years. The questions are much deeper now, compared to how they used to be.

[@zachstarattack7320]

Thank you savior man!

[@connorbreit2035]

AP test tomorrow, gotta lock in

[@e_jed9823]

Ap test td bro I’m so cooked😭😭

[@speerso1]

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!!!

[@rrss2583]

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.

[@glennwatson3313]

What we all learned.

[@georgebell1684]

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.

[@SamuelWang1]

my understanding is that nominal wages minus the higher rate of inflation is the real wage, not real income. Real income is the same thing as real GDP, since national income (which is the same thing as real income) is another way of saying GDP

[@brianlipiano7113]

this guy is the best

[@dwreborn9077]

Very clear explanation🙏🏻🙏🏻

[@cesarmoreno987y]

great to see you upload again

[@SourceCodeDeleted]

This is interesting.

[@gauravgandhi1180]

You rock

[@kozmosnotgay]

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

[@glennwatson3313]

Yes.

[@JJ-ki7zf]

4:47 Starts talking about ample reserves ur welcome

[@rojinaadhikari4550]

thank you

[@andrewmacomber8345]

good one

[@glennwatson3313]

If this is Part 2, where is Part 1?

[@ILOVEPOWER3679]

jacob its all over the screen

[@aaryankamdar6479]

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

[@zhiyingcatherinezhao8387]

Wouldn’t question 1 be D because they use open market operations the most?

[@joewichterman1193]

Y’all glazin

[@user-js2wl4lk1g]

why 1 is not A?😭

[@yusoufgladney9740]

because OMO is the primary thing that the government uses. so D is the best answer.