Chapter17 by shuifanglj


									Chapter 17 Section 1
   $1 lasts 18 months, $5
    lasts 2 years, $10 lasts
    3 years, $20 lasts 4
    years, $50 and $100
    lasts 9 years.
   $541 million is printed

Who is on each bill?

Why were they famous?

Functions of Money
   Market economy needs money
   Bartering-exchanging goods and services
   3 Basic Functions of Money:
       Medium of exchange
       Standard of value
           Compare goods and services
           Compare income and profit to make economic decisions
       Store of value
           Saving money

Characteristics of Money
   Currency-coins and paper bills used as money in an
   6 characteristics that make our money ideal:
       Generally acceptable
       Counted and measured accurately
       Durable and not easily destroyed
       Convenient and easy to carry/use
       Inexpensive to produce
       Supply is easily controlled

Chapter 17 Section 1
   “This note is legal tender for all debts, public and private.”
   Our money is money because the government says it is
   Money Security

Ink, Pair, Share
   Answer the “Citizen’s Journal” question on
    page 455 individually
   Partner up and read/discuss your response
   Share with the class

Chapter 17 Section 2-Banking System
   Created during the
    Middle Ages in Europe
   Banks help save money
    and exchange it for
    goods/services safely

   Other kinds of money:
       Checks
           Demand deposit-$ in checking account
       Travelers checks
           Valey printed on check
   Money supply-total amount of money
    available for use as a medium of exchange
   *Chart on page 463*
Bank Services
   Checking accounts
   Savings accounts
       Money is lent out for other purposes
       You get interest
   Loans-amount of money borrowed for a
    certain time period
       Borrower pays with interest
       Fractional reserve banking-banks keep a % of
        checking and savings deposits in reserve
Other Financial Institutions
   Savings and loan associations
       Mainly for loans to buy house
   Mutual savings bank
   Credit union
       Nonprofit banking that only serves its members
       Savings deposits, lend money

Chapter 17 Section 3: Federal Reserve
   Federal Reserve System-provides important
    services to US banks and regulates their
       Split into 12 Federal Reserve Districts (pg 471)
       Each district’s Federal Reserve Bank supervises
        banking in that district
   FED has 7 Board of Governors members
    appointed by the President for 14 years
       Responsible for running FED as a whole
Functions of the FED
   Supplies currency to banks
   Keeps federal govt’s checking account
   Tax money is deposited at Federal Reserve
   Gov writes checks from FED to pay for
   Keeps track of federal govt’s debts, bonds,
    bills, notes
Functions of the FED cont’d
   Collect and clear checks
   Sets minimum amount of reserves a bank
    must keep on deposit
       So banks don’t run out of $$$
   Truth in Lending Law
       Banks must tell you the full cost of borrowing
   Make loans to banks
Functions of the FED cont’d
   Controls $ supply
       Change reserve requirements
       Change discount rate
       Buy/sell gov. bonds

Money and the Economy
                                               Slowdown in
                                             economic activity
      Increase in demand                      and production
         for goods and
                                              Less money, so
                                             demand decreases
       Reduces buying
       power of money
                                               Loans easier
      Discourages loans

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