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The Federal Reserve and You, Version 2.0

< Chapter 2: History of Central Banking in the United States Chapter 4: Monetary Policy >

Chapter 3: Money and Banking 101

In this chapter, explore the foundations of money and banking in the United States. Learn about the characteristics and functions of money and why money works better than bartering. Find out more about the money supply and two important measures of the money supply — M1 and M2. Discover more about our fractional reserve banking system and how money is created when banks make loans. Finally, delve deeper into price stability and learn about some of the causes and effects of inflation.

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