Chapter 12 Money – The Federal Reserve - Banks Relevant standards (Economics) 6.2.6.C - Explain...

Chapter 12

Money – The Federal Reserve - Banks

Relevant standards (Economics)

6.2.6.C - Explain the function of money and its use in society. 

6.2.6. D - Define economic institutions (e.g., banks, labor unions).

Section 1 – Money Objectives

List and describe the 3 major roles of money.

Describe the major qualities of money.

Relevant standards (Economics)

6.2.6.C - Explain the function of money and its use in society. 

Money must play 3 major roles:

Medium of exchange

Money can be exchanged for just about anything and because there is no need to barter; it’s easy.

Relevant standards (Economics)

6.2.6.C - Explain the function of money and its use in society. 

Money must play 3 major roles:

Store of Value

Value of a dollar stays with it.

Relevant standards (Economics)

6.2.6.C - Explain the function of money and its use in society. 

Money must play 3 major roles:

Measure of price

makes the value of an item easy to understand.

Relevant standards (Economics)

6.2.6.C - Explain the function of money and its use in society. 

Money must play 3 major roles:

1. Medium of exchange – money can be exchanged for just about anything and because there is no need to barter; it’s easy.

 2. Store of Value – value of a dollar stays with

it. 3. Measure of price – makes the value of an

item easy to understand. Relevant standards (Economics)

6.2.6.C - Explain the function of money and its use in society. 

Money should also have the following qualities:

All money, in order to be used effectively for a nation must have the following:

Relevant standards (Economics)

6.2.6.C - Explain the function of money and its use in society. 

Money should also have the following qualities:

Stability same today as

tomorrow

Relevant standards (Economics)

6.2.6.C - Explain the function of money and its use in society. 

Money should also have the following qualities:

Portability small an easy

to carry

Relevant standards (Economics)

6.2.6.C - Explain the function of money and its use in society. 

Money should also have the following qualities:

Durability high quality

paper or metal

Relevant standards (Economics)

6.2.6.C - Explain the function of money and its use in society. 

Money should also have the following qualities:

Uniformity all $1 the same,

all $5 etc

Relevant standards (Economics)

6.2.6.C - Explain the function of money and its use in society. 

Money should also have the following qualities:

Divisibility that’s why we

have coins!

Relevant standards (Economics)

6.2.6.C - Explain the function of money and its use in society. 

Money should also have the following qualities:

Recognizable hard to

copy/easy to recognize

Relevant standards (Economics)

6.2.6.C - Explain the function of money and its use in society. 

About $1.148 trillion on an average day Types of “money” –

today there are currency, demand deposits, traveler checks etc…

Relevant standards (Economics)

6.2.6.C - Explain the function of money and its use in society. 

Please turn to page 143 of text… Complete handout as directed…

6.2.6. D - Define economic institutions (e.g., banks, labor unions).

Section 2 -- Banks & Federal Reserve

3 major functions of banks

Facts on the federal reserve!

6.2.6. D - Define economic institutions (e.g., banks, labor unions).

Banks provide 3 functions:

Accept and hold deposits – physical protection against fire and theft; also deposit insurance up to $100,000 by FDIC

6.2.6. D - Define economic institutions (e.g., banks, labor unions).

Banks provide 3 functions:

Making loans – “financial middlemen” of money from depositors to borrowers; interest from loans is the chief money maker of banks

6.2.6. D - Define economic institutions (e.g., banks, labor unions).

Banks provide 3 functions:

Collecting and transferring funds – management of checking account is a key role of banks for you

6.2.6. D - Define economic institutions (e.g., banks, labor unions).

The Federal Reserve System:

6.2.6. D - Define economic institutions (e.g., banks, labor unions).

The Federal Reserve System:

The nations banking system made in 1914 to improve banking. ***Called the “Fed”

Made up of 12 District Banks throughout the U.S. – think of it as a bank for a bank!

6.2.6. D - Define economic institutions (e.g., banks, labor unions).

The Federal Reserve System:Provide banking services for financial institutions

Holds deposit accounts for local banks such as a National City or a PNC.

Supplies cash for those same local banks.

Processes checks – Federal Reserve banks process 20,000,000,000 checks a year! Yes, ALL OF THEM!

6.2.6. D - Define economic institutions (e.g., banks, labor unions).

The Federal Reserve System:

Serve as banker for the federal government – they keep their checkbook!

6.2.6. D - Define economic institutions (e.g., banks, labor unions).

The Federal Reserve System:

Supervises and regulates the nations banking system !

6.2.6. D - Define economic institutions (e.g., banks, labor unions).

The Federal Reserve System:

Develop monetary policy for the USA!

6.2.6. D - Define economic institutions (e.g., banks, labor unions).

Counterfeit Money

6.2.6. D - Define economic institutions (e.g., banks, labor unions).

MONEY

6.2.6. D - Define economic institutions (e.g., banks, labor unions).

Salt

6.2.6. D - Define economic institutions (e.g., banks, labor unions).

100000 front

6.2.6. D - Define economic institutions (e.g., banks, labor unions).

Colonial Currency, Pennsylvania, 50 shillings, 1775

6.2.6. D - Define economic institutions (e.g., banks, labor unions).

PA 4 pounds

6.2.6. D - Define economic institutions (e.g., banks, labor unions).

continental

6.2.6. D - Define economic institutions (e.g., banks, labor unions).

5000

6.2.6. D - Define economic institutions (e.g., banks, labor unions).

5000 back

6.2.6. D - Define economic institutions (e.g., banks, labor unions).

50

6.2.6. D - Define economic institutions (e.g., banks, labor unions).

2

6.2.6. D - Define economic institutions (e.g., banks, labor unions).

100 GOLD

6.2.6. D - Define economic institutions (e.g., banks, labor unions).

6.2.6. D - Define economic institutions (e.g., banks, labor unions).

6.2.6. D - Define economic institutions (e.g., banks, labor unions).

New 20

6.2.6. D - Define economic institutions (e.g., banks, labor unions).

100000 front

6.2.6. D - Define economic institutions (e.g., banks, labor unions).

100000 back

6.2.6. D - Define economic institutions (e.g., banks, labor unions).

Make Your Own Currency??

6.2.6. D - Define economic institutions (e.g., banks, labor unions).

6.2.6. D - Define economic institutions (e.g., banks, labor unions).

Who would you place on the bill?

President?? Sports Star??? Civic Leader??

Names:

6.2.6. D - Define economic institutions (e.g., banks, labor unions).

6.2.6. D - Define economic institutions (e.g., banks, labor unions).

The Secrets of Making Money!

6.2.6. D - Define economic institutions (e.g., banks, labor unions).