Financial Sector

This study guide covers Unit 4 of AP Macroeconomics, focusing on the Financial Sector. Key topics include: financial assets (liquidity, rate of return, risk), nominal vs. real interest rates, functions and measurements of money (M1, M2, M3), banking and the money multiplier, the Money Market (equilibrium, shifters of money demand), Monetary Policy (discount rate, reserve requirement, open-market operations), and the Loanable Funds Market. Practice questions and exam tips are also provided.