What you’ll learn to do: explain the role of banks in the U.S. monetary system

In this section you’ll learn how banks serve as intermediaries for the flow of money between lenders and borrowers. You’ll also learn about the system in which which banks operate: the Federal Reserve System.

The specific things you’ll learn in this section include:

• Explain the difference between M1 and M2 money supply and how they are measured
• Explain how banks act as intermediaries between savers and borrowers
• Explain the structure and key functions of the Federal Reserve
• Explain how the Federal Reserve System implements monetary policy