These Economics W.I.R.E.D. activities recommend web links that relate to key concepts of each chapter of the textbook. For each link, there are instructions to guide you to specific information, followed by several discussion questions or exercises.

Key Concepts: What is Money?, The Fed, the Banks, and the Link from Reserves to Deposits, How the Fed Controls the Money Supply: Currency plus Deposits, Money Growth and Inflation

Federal Reserve—Money Supply Data

Scroll down the web page to review the historical "Seasonally Adjusted" measure of M1, M2, M3, and Debt data.

• Calculate what percentage of the total U.S. money supply is categorized as M1. Explain why M2 is so much larger than M1.
• Explain why the banking system is important in maintaining the overall money supply in the U.S.
• Identify potential factors that may explain why the M1 measure has not grown at the same rate as M2 and M3 during the past five years (Hint: consider financial innovations).
• Survey the offshore banking services that are currently available to investors at British Capital Group. Explain how financial innovations can impact the Federal Reserve's ability to manage the money supply in the U.S.