Economics UNIT 3 Chapters 10 & 11 Money, Banking, and Personal Finance

What is Money? Money is anything that serves as a medium of exchange, a unit of account, and a store of value.Money is anything that serves as a medium of exchange, a unit of account, and a store of value. Money as Medium of Exchange –A medium of exchange is anything that is used to determine value during the exchange of goods and services. Money as a Unit of Account –A unit of account is a means for comparing the values of goods and services. Money as a Store of Value –A store of value is something that keeps its value if it is stored rather than used.

The Six Characteristics of Money The coins and paper bills used as money in a society are called currency. A currency must meet the following characteristics:

3 Types of Money Commodity money consists of objects that have value in themselves.Commodity money consists of objects that have value in themselves. Representative money has value because the holder can exchange it for something else of value.Representative money has value because the holder can exchange it for something else of value. Fiat money, also called “legal tender,” has value because the government decreed that is an acceptable means to pay debts.Fiat money, also called “legal tender,” has value because the government decreed that is an acceptable means to pay debts. WHAT MAKES OUR MONEY VALUABLE?WHAT MAKES OUR MONEY VALUABLE?

The only stuff from section 2 Chapter 10: Banking in the Twentieth Century The Federal Reserve Act of 1913 created the Federal Reserve System. The Federal Reserve System served as the nation’s first true central bank. Chapter 10, Section 2 The Banking Act of 1933 created the Federal Deposit Insurance Corporation (FDIC). Today, the FDIC insures customers deposits up to $100,000. The nation was also taken off of the gold standard.

How Banks Work/Modern Banking ( Section 3 Chapter 10) Money Supply M1 M2 Types of accounts from banks: Protect and Save you Money Fractional Reserve Banking Bank Runs Bank Failures The Federal Reserve System The Modern Banking Crisis

The Banking System Film Questions 1.Explain how Fractional Reserve Banking works. 2.What is the Federal Reserve and what is its role in the banking system 3.How did the banking system contribute to the Great Depression? 4.How can banks “grow” or “contract” an economy?

CREDIT Definition: 4 C’s of Credit: Pros:Cons:

Let’s Talk About Today’s Economic Crisis Financial Crisis timelineFinancial Crisis timeline Break-it-down: Why did it start? When did it start? How is it impacting us? When will it end?

Investing 101 (seE packet for additional info) 1. saving- 2. investment- 3. financial assets- A. Three types of investments: Q: Which type is the best?  diversification-  portfolio-  liquidity-  return-  risk-  single interest-  compounded interest- interest-

Why Invest…why not just “sit on it” 1.? 2.?? 3.???

Investment Investigation Activity Investment Investigation Honors Investment Investigation Honors

Things to know about….. 1.Savings Accounts- 2.Checking Accounts- 3.Debit Cards- 4.Certificates of Deposit- 5.Money Market Accounts-

Things to know about BONDS… 1.Definition- 2.Maturity- 3.Par Value 4.Yield- 5.PROS – 6.CONS

Types of Bonds Government Savings- Treasury- Municipal- Private Corporate- Junk-

Stocks and Stuff Terminology 1.Definition- 2.Broker- 3.Exchange- 4.Corporation- 5.Index- 6.Basic investing tips:

Types of Stocks INCOME STOCK- GROWTH STOCK COMMON STOCK- PREFERRED STOCK-

Retirement Type Investments IRAs-IRAs- Mutual Funds-Mutual Funds- 401k-401k-