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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).
