2 Banking System

0:00today we'll learn about the banking

0:02system just to remind you that these

0:04videos are really the lecture material

0:06so you have to take notes on them so for

0:08each slide record this slide number on

0:10the top left and then summarize this

0:12slide in your own words in one sentence

0:15or you can write an example for it or

0:17you can write a question on it and

0:19you're going to show me your notes later

0:20to impress me let's

0:23go printing money will help stimulate

0:26the economy this is actually a myth and

0:29today we want to see how we can unpack

0:31the myth so before we proceed I want you

0:34to give me your initial reaction to this

0:36idea and how you would explain that this

0:38is a myth and we're going to come back

0:40to it later so pause here record this

0:43slide number and write a few lines um at

0:46least 30 40 words uh at least three

0:49lines four lines um and explain why this

0:51is a myth based on what you know so far

0:54it's okay if your answer is not uh

0:56correct but I just want you to give it a

0:59try these are the kinds of questions

1:01that you can expect to get in a test so

1:03take them

1:06seriously here's a question for you do

1:08you think credit card is money why or

1:11why not refer to the functions of money

1:13and see if credit card matches that it

1:16may seem like yeah I mean credit card we

1:17use it for transactions therefore it's a

1:19medium of exchange but the reality is

1:21that credit card is not money why not

1:24let's say you go to buy coffee and you

1:26have to pay $5 for it if you take out

1:29your credit card you can pay the

1:31shopkeeper and come out but are you done

1:34are you off the hook no you're actually

1:37on the hook because you still have to

1:38pay the bill at the end of the month and

1:40how do you pay that well using money

1:42which is not just cash it could be your

1:44bank account it could be your checking

1:46account but what happens is that if you

1:49pay with a debit card then you're off

1:51right debit card or money would

1:54discharge your debt whereas credit card

1:56will create debt so credit card is

1:58really a form of Bor

2:00growing we used to have a gold standard

2:03uh which is when the currency were was

2:05backed by gold so you could literally

2:07convert your notes to to go look at all

2:09that goal Isn't that cool now we don't

2:11have that anymore it's been it's been

2:13more than 50 years that we don't have it

2:15why because the money that we have is

2:18already reliable that people trust it

2:21all right so that's called Fiat money

2:23okay it only operates based on the

2:25government's uh approval and because it

2:28has all that reputation people people

2:30use it so pause here record this slide

2:32number and take some

2:34notes have you heard of these nasty

2:36acronyms well they're actually useful

2:39the taxfree savings accounts is a great

2:41idea of saving money without being taxed

2:43on it and it's very useful to do it when

2:47you're young and you have low income

2:50this is something that you have to be

2:51thinking about it as of now um and just

2:53keep in mind when you talk to your bank

2:55it's limited by your age and how many

2:57years you've been a Canadian citizen the

2:59good thing is that that the unused

3:00amounts carry over the RSB the

3:03registered retirement savings plan is

3:05more for pension it's useful when your

3:08earnings increase and so that you don't

3:10want to pay the tax right away but then

3:12you can withdraw at old age when your

3:13income is lower so that you don't go

3:15into a higher tax bracket and then

3:18another one is for education for

3:20postsecondary education so once you have

3:22children please do this for your kids

3:24it's an amazing way of helping them go

3:26to university and the government uh

3:29contri to it so these are privileges for

3:31being Canadians pause here and

3:37summarize nice or gumy now when we talk

3:40about net worth this is not really your

3:42actual worth as a person it's not your

3:44intrinsic human worth this is actually

3:47accounting thing so it's your assets

3:49minus liabilities it's a measure of your

3:52wealth now this this uh Cartoon is quite

3:54interesting if you look at it the the

3:56biggar actually has the greatest net

3:58worth because the other people people

4:00are all in debt right so what is assets

4:03assets are basically what you own and

4:04here are a whole bunch of examples of of

4:07of things uh as opposed to liabilities

4:10which is what you owe and there are a

4:12whole bunch of examples here so once you

4:15put them in once you have basically the

4:17net of all of that that's going to be

4:18your net worth it can be positive or

4:20negative so pause here I would say write

4:23some examples of your own assets and

4:25your own liabilities whatever it may be

4:30you want to be smart about how you hold

4:32your wealth keep in mind that most

4:34assets depreciate in value over time a

4:37prime example of that is a car when it

4:39comes to savings try to go for compound

4:42interest you just saw an example of that

4:44how it can build up over time something

4:47that's also very useful is be careful

4:49about monthly fees they can be little

4:52each time but they add up to a lot over

4:54time and then you're going to be like yo

4:57no what have I done the good thing for

4:59you guys is that you're students so

5:01usually there are student accounts with

5:02no fees so make sure you go for that and

5:04sometimes there are other options like

5:06if you have a package of multiple

5:07accounts there will be no fees but be

5:09very careful about not paying any

5:11monthly fees to Banks or credit cards

5:14talking of which don't get a loan unless

5:16you know how to pay you can easily be

5:19ripped off by Banks and financial

5:21institutions when it comes to interest

5:22payments on loans don't get a credit

5:25card if you know you don't have the

5:27discipline if you know you're likely not

5:29to pay the balance on time or else

5:31you're going to be a slave to your card

5:33these are useful tips for your financial

5:35investments so pause here and summarize

5:37it in your own

5:39words the most major financial decision

5:42that most people make in their life is

5:44becoming a homeowner it's a great goal

5:47for a lot of people and it affects their

5:49life a lot especially because of the

5:51mortgage P payments it's their greatest

5:53financial asset it's also very important

5:55for raising a family it makes a lot of

5:57difference when you have kids if if you

5:59have more space than less all right so

6:02there are certain requirements here that

6:03I'm giving you so you need to have a lot

6:06of savings for the down payments um also

6:09people tend to buy a home when they want

6:11to settle um usually a bit later in

6:14their life when they want to stabilize

6:16and you're going to be responsible for

6:17the repairs and there are a bunch of uh

6:20conditions and determining factors in

6:22what is a good home and how to make a

6:24decision so these are usually good tips

6:26this is a real estate tip location so

6:28location means it should be close to

6:30good uh access basically especially to

6:33schools if you have children you have to

6:35think ahead good schools around you

6:37access to highways uh and public transit

6:40in terms of security also the crime

6:42level and also the potential for growth

6:44so that the value of the home will will

6:45grow all of that is location um and I

6:48yeah okay I'm going to admit I put State

6:50here so that it rhymes with date oh no

6:52but what I mean by state is how

6:54renovated it is okay so pause here what

6:56I would suggest is think of some require

6:59some other requirement than these for

7:01becoming a homeowner and also some

7:03determining Factor other than these and

7:05add that to your

7:10notes wow that was cool now you might be

7:13like hang on what the hell is this

7:14mortgage look guys mortgage is just a

7:16loan it's a long-term loan for real

7:18estate for buying a home all right and

7:21you have to pay for it for two things

7:23one of them is the principle and one of

7:25them is the interest right the thing

7:27with the principle is that as you buy it

7:29it's going to lower your liabilities

7:31which means that it's going to increase

7:33your net worth all right so it's going

7:34to disappear over time and it's going to

7:37get less now another option is if you

7:38don't want to become a homeowner is you

7:40can can always rent all right and the

7:43conditions for that is one of them

7:45that's quite important is actually the

7:46landlord's character and person

7:48personality and also your neighbors so

7:51this is actually going to make a lot of

7:53difference in terms of your your

7:54experience in being anywhere so it's not

7:56just the money but actually the people

7:58around you can make your life a living

8:01hell or a paradise so be careful pay

8:03attention to that so again pause here uh

8:06write down some not on mortgage and

8:07maybe for renting add your own

8:09determining

8:14factors wow that was cool let's talk a

8:17little bit about our banking system

8:18which has two main branches one of them

8:20is the central bank one of them is the

8:22commercial or chartered Banks the

8:23central bank is the public sector

8:25whereas the commercial is private when

8:27in economics we say public what it means

8:30is governmental and when we say private

8:33what it means is firms and household so

8:35you're going to see those terms again

8:37that's what public and private mean in

8:39economics so this is a short one pause

8:42here and take

8:43notes Canada Central Bank is called the

8:46Bank of Canada this CB you're going to

8:48see again this is just Central Bank some

8:51of its main functions is that it it's

8:53this is the institution which can print

8:55money all right and that's called the

8:56monetary policy which we're going to see

8:58so the Bank of Canada is it's not the

8:59kind of bank that you see in the street

9:01it's in Ottawa you cannot have an

9:02account in it um they can lend money to

9:07the commercial Banks especially if the

9:09commercial Banks need to clear their

9:10accounts or to prevent panics all right

9:14um they're officially owned by the

9:15government but they're operationally

9:17independent I want to emphasize this

9:19first of all when we say government

9:20government means the Department of

9:21Finance and the Parliament all right but

9:24for all practical purposes the Bank of

9:26Canada is an independent entity all

9:29right right now that's very important

9:31that the Central Bank should be

9:32independent why because think of the

9:34lifespan of a government it's about four

9:36or 5 years and when it's the election

9:38times the government has incentive to

9:41make people happy and win popularity

9:44they would look for a quick fix and one

9:46of them is printing money to stimulate

9:48the economy to create jobs so that the

9:50businesses can boom but that's not a

9:52smart idea can you see why when there's

9:55a surplus of money around what happens

9:57to its value it's purchasing power drops

10:00and that's called inflation so printing

10:02money is only a political stimulus only

10:05a political impulse it's not an economic

10:08solution and it's really shortsighted

10:10countries with high inflation are all

10:13countries where their Central Bank is

10:14not independent of the government we

10:16want to maintain the autonomy of the

10:18Central Bank from the government so that

10:20it can aim at long-term economic

10:22stability especially controlling

10:24inflation we don't want the government

10:26to influence the central bank and in the

10:29news you might see the Federal Reserve

10:32sometimes called the FED as a short form

10:34so the fed or the Federal Reserve is the

10:36equivalent of the their Central Bank in

10:38the US so pause here report the slide

10:41number and summarize it in your own

10:44words monetary policy is a macroeconomic

10:47policy where the Central Bank

10:49manipulates the interest rate now do you

10:52remember what is interest rate it is the

10:54opportunity cost of holding money when

10:56you hold liquidity you are giving up

10:59interest it's also the cost of borrowing

11:02when you borrow money then you have to

11:03pay interest on it and that goes hand in

11:06hand with the money supply so in

11:08monetary policy we have money supply and

11:10interest rate working together how does

11:12that work there's always an exchange

11:14between money for bonds so let's look at

11:16an example let's say the Central Bank

11:18buy bonds from the people all right so

11:20this is people if if on the one side you

11:23have the Central Bank on the other side

11:24you have the people and the Central Bank

11:26wants to buy bonds then people are

11:29giving their bonds they're giving their

11:32bonds to the central bank what are they

11:33receiving in return in return the

11:35central bank is giving them money so the

11:37amount of money in circulation the money

11:39supply is going to go up and that's

11:41going to create a surplus of money now

11:44whenever you have a surplus of anything

11:45when there when there is a lot of

11:47something what happens to its value what

11:50happens to the ability to hold that

11:53right the interest rate is going to drop

11:55okay because it's so available it's so

11:57easy to get a loan the cost of borrowing

11:59is going to go down all right if the

12:02Central Bank sells Bonds on the other

12:04hand then they're giving a lot of bonds

12:06to people and people in return are

12:08giving their money back so that's going

12:11to create a shortage of money by the way

12:13the first one is called an expansion of

12:15money supply the second one is called a

12:18contraction of money supply and in that

12:20case the interest rate goes up and now

12:22if you remember again interest rate is

12:24the cost of borrowing so the way

12:26interest rate affects the economy is

12:28through people borrowing so households

12:30and firms how much they borrow it's

12:32going to affect how much they spend if

12:34the interest rate is lower they can

12:35borrow more and spend more if the

12:37interest rate is higher they can borrow

12:39less and spend

12:41less one reminder Government Bond is the

12:44same as a government debt so if you

12:46purchase bonds it means you are buying

12:48government's debt in the US it's called

12:51treasury bill so if you see treasury

12:53bills in the news is the same as bonds

12:55so pause here and summarize this slide

12:58using your own word

13:01this is an important slide so pay

13:03attention and take good notes just a

13:04reminder the interest rate is the cost

13:07of borrowing so whenever you see

13:08interest rate you should immediately

13:10think of borrowing now let's let me give

13:13you a bracket here a very important

13:15trade-off in life is between short run

13:17versus long run as an economist should

13:19be very sensitive about trade-offs

13:22usually short-term benefits come at the

13:24expense of long-term growth and vice

13:26versa so let's look at how monetary

13:28policy policy works if the central banks

13:30lowers the interest rate remember they

13:32lower the interest rate by expanding the

13:35money supply having more money in

13:36circulation printing more money but it's

13:39not just printing because money is not

13:40only bills right now what I want you to

13:43do is you have to think about what

13:44happens to the level of borrowing if the

13:47interest rate is lower so you can when

13:49you take notes you can put an arrow

13:50either upward Arrow or low or downward

13:52arrow and then what happens to the level

13:54of spending how much people are going to

13:56borrow and how much are people are going

13:58to spend these these arrows by the way

14:00they show sequence so because of

14:01interest rate the effect of that on

14:03borrowing and because of borrowing the

14:05effect of that on spending all right and

14:08as a result what happens to the level of

14:10production of goods and services again

14:11up or down and what happens to the level

14:13of jobs up or down okay so

14:16employment this is called expansionary

14:19monetary policy all right it's used to

14:21combat unemployment so here I'm I'm

14:23giving you a tip when it says combat

14:25unemployment it means the jobs will go

14:26up all right now the thing is that this

14:29is only in the short run this works only

14:31in the short run which means that

14:33monetary policy is really a pacifier it

14:36tends to work in the short run but it's

14:38not a real solution why not because what

14:42happens is that when you have a lot of

14:43production when you have a lot of

14:45spending then the the economy is very

14:47heated and that's going to exert upward

14:49pressure on prices and

14:51wages and what happens at the end of the

14:54day is that you're only only going to

14:56get inflation so when the prices and

14:58wages go up then the spending goes down

15:00the production goes down so we are back

15:01to square one but now the prices are

15:04higher all right and it should make

15:06sense just think about it there is no

15:07magical shortcut to make people richer

15:10simply by printing money it's not that

15:12easy why not because there is a limited

15:14amount of goods and services to go

15:16around so if you flood the market with

15:18more money people will just start

15:20fighting over those limited goods and

15:22services by bidding more and that only

15:24drives up the prices which is called

15:27inflation without any real imp act on

15:29the standard of living okay so this is

15:32called the long run neutrality of money

15:34in the long run money does not have any

15:36impact on on the GDP which is our level

15:40of production and on the UN unemployment

15:43rate okay which also which is the good

15:46news here is that we have the solution

15:47to inflation Stop Printing money right

15:49it's as simple as that and it has worked

15:52right so there is a very famous quote

15:54here by Milton Freedman that inflation

15:56is always and everywhere a monetary

15:58phenomen on which means that whenever

16:00you have inflation it's because it's

16:02backed by printing money and if you stop

16:04printing money then you stop inflation

16:06and it works we have tried that so

16:08Canada's monetary policy since 1992 has

16:11been inflation Target of 2% so we have

16:14maintained inflation at

16:162% in 2020 during the covid pandemic uh

16:20the Central Bank actually deviated and

16:22dropped this policy so our inflation

16:25increased for a little while that during

16:28that period but that was an exception

16:30overall we have been very successful not

16:32just Canada uh all Western countries all

16:34industrialized countries have been very

16:36successful in maintaining inflation

16:38because the central bank has been

16:39independent and has been maintaining the

16:42money supply all right now I want you to

16:45also look at the opposite case it should

16:47be easy if the Central Bank raises the

16:49interest rate what happens to the level

16:50of borrowing because of that what

16:52happens to the level of spending because

16:54of that and then what happens to

16:55production and jobs so I want you to

16:57complete this in your note as you go on

17:00and that would be called contractionary

17:02monetary policy which is used to combat

17:05inflation all right so take good notes

17:07Here make sure your notes are complete

17:09you fill in the blanks here this is an

17:11important names expansionary versus

17:13contractionary monetary policy what each

17:15of them is and how they work and also

17:17pay attention that these are only short

17:19run Solutions the only long run thing

17:22that monetary policy can do is affecting

17:25inflation either higher or lower pause

17:28here

17:30did you see that it was crushed

17:33commercial or chartered banks are

17:35private institutions that you're

17:36familiar with like CIBC TD RBC and

17:40so forth and they have a whole bunch of

17:42functions the main one is that you can

17:44have a checking or savings account they

17:47do Investments uh you might have heard

17:49of this word mutual funds this is

17:51basically when they pull money from many

17:54many investors and then they invested

17:56money in stocks and bonds trying to

17:58reduce the risk so that everybody gets

18:00the share in the long run uh you've seen

18:02mortgage before it's basically a loan

18:04for buying a home and a whole host of

18:06other things that they do um these are

18:09things that you're familiar with and

18:11it's a good idea to to have an idea of

18:13of what they do uh yeah this is called

18:15wiring money it's going to like you put

18:17the money in the wire and send it over

18:19what a mess so pause here take some

18:21notes uh try to think of some of the

18:23functions of the commercial banks that

18:25you use and maybe your parents use so

18:27write that in your notes

18:30what do you think is the main source of

18:32income for banks is it the fees that

18:35they charge you well that is a source of

18:38income but that's not the main one it's

18:39not really the fees but it's rather the

18:41interest they charge on loans and here

18:44we have a cool formula which is the

18:46interest spread so here's the thing if

18:48you borrow money from the bank then

18:50you'll have to pay interest on it right

18:52so there is some interest that they

18:53charge on loans when you put your money

18:56in a savings account then they pay you

18:58interest on that now are the two

19:01interests equal far from it which one is

19:04higher the interest that they charge you

19:06is much higher than the interest that

19:07they pay you and that's their source of

19:10income all right so for the banks you

19:12can think of that as a profit margin all

19:14right so they have a dilemma and the

19:16Dilemma is how much reserves to keep

19:19they always have the incentive to lend

19:22some deposits because they earn interest

19:24so their main their main interest is

19:26earning interest but the catch is is

19:28they don't want to land everything out

19:30because if they land out everything and

19:33then somebody goes to withdraw their

19:34money then they're like oh you whatever

19:36that what a Miss there could be a panic

19:39especially if if all the banks do this

19:41right so they want to keep enough for

19:44day today withdrawals but they don't

19:46want to keep too much because they will

19:48be missing out on the interest right so

19:50once again you have the idea of

19:52opportunity cost there's a trade-off

19:54between how much they

19:55keep um for for day-to-day transactions

19:58versus how much they give out for

20:00interest and the system that we have

20:02here is called the fractional Reserve

20:04System which is when the banks don't

20:06keep your deposits but they only keep a

20:09very small fraction of it and lend out

20:11the rest so pause here and summarize it

20:14in your own

20:16wordss the fractional Reserve System

20:19creates deposits in the process how does

20:22that work whenever you deposit some

20:23money in a bank it's going to be

20:25multiplied in the banking system because

20:28the banks don't hold all of their

20:29deposits this is because by the way so

20:31basically the deposit creation mechan

20:33mechanism is really a domino effect it's

20:35a ripple effect all right it's a

20:38multiplying effect we're going to look

20:40at some terminology first um there is

20:43the reserve ratio which is a cash

20:44reserves relative to the total deposit

20:46so basically what percentage the banks

20:49want to hold for their day-to-day

20:51transactions and that in dollar amount

20:54would be your desired reserves all right

20:57anything in addition of in addition to

20:59that they have to blend it out well that

21:01was cool because they want to make

21:03interest all right so we're going to

21:05look at an example to see how all of

21:06this mess Works let's say there is an

21:08initial deposit of $100 in a bank and

21:11the desired Reserve ratio is 10% all

21:14right so what it means is that the bank

21:16would keep 10% of that and would lend

21:19out the rest I'm making the numbers easy

21:20here by the way what I want you to do is

21:23fill that in and you don't need a

21:25calculator for this one how many dollars

21:27would they keep and how many dollars

21:29would they lend out all right so pause

21:31here and write that

21:34down let's put the example that we saw

21:36into a table there is an initial deposit

21:38of $100 the bank keeps 10% of that for

21:42their daytoday transaction so that would

21:44be $10 and that is the desired reserves

21:47what do they do with the rest well they

21:49would lend it so what is the remainder

21:51$100 minus 10 would give you 90 all

21:54right and that is the excess reserves so

21:56that should be pretty straightforward up

21:58to now I want you to pause here and and

22:00think about what's Happening Here the

22:01bank has $90 available for loans so

22:04let's say somebody walks into the bank

22:06and say hey yo have you got some loan

22:08for me and then the bank is like yeah

22:10we've got $90 for you and assuming that

22:12the person is qualified the bank is

22:14going to write off a loan of $90 to them

22:16this could be in cash but it could also

22:18be in electronic format it could be just

22:20debiting their account all right so it's

22:22it's it's totally arbitrary thing so in

22:25their account say okay yeah sure you

22:26have you can go and and spend $90 right

22:29now the person who is borrowing $90 what

22:31are they going to do with it if they're

22:33borrowing if they're getting a loan of

22:35$90 presumably they need it they want to

22:38spend it on something right so they're

22:40going to go and spend the $90 on

22:41something which means that the $90 is

22:44going to become the income of the seller

22:47right so this money is going to be

22:49borrowed and spent it becomes the income

22:51of someone else and it's going to get

22:52transferred to the account of someone

22:54else all right so the $90 somewhere down

22:57the road becomes a new deposit into a

22:59new account and the same process is

23:02going to is going to repeat itself this

23:04is the ripple effect so the $90 becomes

23:06a new deposit the bank keeps 10% of that

23:10which is $9 and they're going to lend

23:12the remainder which is

23:14$81 and again somebody borrows that

23:18$81 somewhere down the road it becomes a

23:21new deposit into a new bank account and

23:23so forth all right so I want you to fill

23:25in the numbers in your table copy the

23:28and make it complete and you you can use

23:30a calculator the numbers become nasty at

23:32some point a few observations is that

23:35the the most important that's so cool

23:37one of them is that one deposit triggers

23:40a chain of further deposits as you can

23:41see so it doesn't remain at 100 but you

23:43get additional deposits okay um and all

23:47of these columns actually reduce in

23:49value as you go down the values go down

23:52all right you can see in all of these

23:53columns the values shrink all right so

23:56the total is is going to actually have a

23:58Finance value by the way a withdrawal

24:00does exactly the opposite if you go and

24:02withdraw $100 from your bank account the

24:05bank is going to call back $90 and and

24:09the person who who will bring it back is

24:11going to again trigger further

24:13withdrawals in other Banks all right so

24:15it goes both way it's very symmetrical

24:17in this sense so pause here copy the

24:19table and complete it for

24:21yourself now you might be like Hangar is

24:24there a way to find the total deposits

24:25that created in the process and the

24:27answer is yes there is actually a simple

24:29formula where you have the initial

24:31deposit divided by The Reserve ratio the

24:33only kind of trick here is that your

24:35reserve ratio will be in decimals

24:37there's another formula here which is

24:39the bank multiplier again very simple

24:41and again your reserve ratio is in

24:43decimals all right a very useful

24:45checkpoint guys is that your bank

24:47multiplier will always be greater than

24:49one one it's a multiplier For Heaven's

24:51Sake right so let's look at an example

24:53let's say you have the example that you

24:56had $100 of initial deposits right and

24:5910% Reserve ratio which is 0.1 you find

25:02the total deposits and the bank

25:04multiplier this is not rocket science

25:06guys you just have to plug in the

25:07numbers by the way in terms of

25:09terminology the bank multiplier is also

25:11called the money multiplier and the

25:13deposit expansion mul multiplier so

25:15pause here and do the question in your

25:19notes let's summarize what we learned

25:22today monetary policy is based on the

25:25interest rate and money supply and it is

25:27governed by the Central Bank notice that

25:30the arrows show sequence so we start

25:33with monetary policy and it has two main

25:35tools money supply as well as the

25:36interest rate and the and you read from

25:39the beginning of the arrow to the end

25:41all right so that's how you read the

25:42concept map too much money supply can

25:45lead to inflation and that's exactly why

25:47our Central Bank has an inflation Target

25:50the Central Bank also monitors the

25:52commercial Banks the interest rate

25:55determines the mortgage rate and the

25:57mortgage is is a form of liability we

26:00also talked about net worth which is

26:02based on our assets versus our

26:05liabilities we talked about some

26:07examples of asset oh that's so cool some

26:10examples of assets and these are

26:11actually things which commercial Banks

26:13offer all right but they also offer

26:16credit cards as well as mortgages and

26:18the credit card is really a form of

26:19liability right it's not Money

26:22commercial

26:23banks are based on they operate based on

26:26the fractional Reserve System

26:28and that is that leads to the deposit

26:30creation through the bank multiplier all

26:34right so in today's lesson I would

26:36emphasize uh the concept of monetary

26:39policy as well as the interest rate so

26:41these are really Central uh so pause

26:43here um do your own concept map try to

26:47add some of the concepts that are not

26:49included here um the more you can change

26:52things the more you internalize it and

26:55the more you succeed in your learning it

26:57is totally okay if your concept map is

26:59is messy the important thing is that you

27:02put thought into it so pause here record

27:04the slide number and do your own concept

27:06map before you

27:08proceed here I want you to pause for a

27:10few minutes and update the answer that

27:12you gave to the myth of the day using

27:15what you learned uh in today's lesson so

27:18look at the concepts from today's lesson

27:20and take your time improve the answer

27:22that you had to the myth based on what

27:25you learned today pause here

27:28I'm going to show you an example uh of a

27:31student who did a good job and this can

27:33be a good answer in an exam to give so

27:35in in terms of counter examples you can

27:37think of Venezuela and

27:39Zimbabwe um you can also think about

27:41Canada during

27:44covid in terms of

27:46counterarguments we have to be careful

27:48that the living expenses will go up and

27:52we have to be careful that liquidity is

27:54going to lead to inflation in the long

27:56run and more money in the circulation

27:59will affect the purchasing power of our

28:01currency all right so improve your

28:04answer based on what you learned and

28:06make sure you have your own answers it's

28:08okay to be inspired by what I have here

28:10but not simply copying it have a great

28:13day