Starter What is a union? Name three kinds of businesses. What is a stockholder? Why would someone choose to go on strike against their employer?

8.08/8.09 Money- Spending, Borrowing, and Investing

Money Before money, people would barter (trade) Money has three functions: It is a medium of exchange (used in trading) It is a store of value (a place to hold wealth) It serves as a measure of value Types of money Coins: metal Currency: both coins and paper Money has value because people accept it

Spending, borrowing, and investing Demand accounts- (Checking); money can be gotten on demand- checks, debit cards Credit cards- people use credit to buy goods. Time deposits: certificate of deposits (CD) CDs: people put their money in and must keep it there for a specific amount of time.

The Financial System Financial institutions Commercial banks: loan money for interest and pay interest on money kept for people Savings and loans: similar to banks Credit Unions: open to members who sponsor them: State Employees Credit Union

Safeguards Federal Deposit Insurance Corporation (FDIC) Insures people bank accounts up to $250,000. Created after the Great Depression People lost everything

Stocks, bonds, and mutual funds Stocks Can be risky investments. You can lose everything you put in but you could also make a lot of money. Mutual funds Pools money from many investors and buys a range of stocks. Money is more spread out. Bonds- loans to a company or the government.

Insurance Insurance is used to help protect something of value Life insurance Health/medical insurance Liability: protects from claims arising from injuries Comprehension: covers a much wider range of items

8.09 The Federal Reserve System The Federal Reserve: The central bank of the United States Banks borrow money from the “Fed” The US is divided into 12 Federal Reserve districts Formed in 1913 Controlled by the Board of Governors (7 members appointed by the President and confirmed by the Senate) One member in chosen as the chairman

What does the Fed do? It deals with banking regulations and consumer credit Oversees large banks Enforces laws that deal with consumer borrowing Holds the government’s money Sells US bonds Manages the nation’s currency (replaces if necessary)

Monetary policy The Fed controls the supply of money into the economy and the cost of borrowing money (interest rates) How does it control the supply of money Discount rate- how much interest banks pay Controls banks reserves- how much money a bank must keep in the Fed