Money and Banking Chapter 10

Money Section One

Money does not have to be spent immediately THREE USES OF MONEY HOW IT FUNCTIONS BENEFITS Medium of Exchange Determines value during the exchange of goods and services Sell one good and then purchase another rather than trying to trade for what you want Unit of Account Compares value of goods and services You can determine whether a price is a good deal based on similar goods Store of Value Keeps value if stored and not used Money does not have to be spent immediately

SUGAR EMERALDS HORSES GOLD COINS SEASHELLS CURRENCY Copy down the following items. Rank them in terms of their usefulness as money, with 1 being the best and 6 being the worst. SUGAR EMERALDS HORSES GOLD COINS SEASHELLS CURRENCY

The 6 Characteristics of Money Durability: must withstand physical wear and tear that comes with being used over and over. Portability: must be able to be carried around for daily use. Divisibility: must be easily divided into smaller denominations. Uniformity: must be able to be counted and measured accurately Limited Supply: must be able to control the amount available Acceptability: people who accept it must be able to use it to get what they want or need

For each of the six items listed above, write down which characteristics each one meets. Think as if each one were the ONLY source of money available. Sugar: Divisibility (ounces, pounds, etc.), Uniformity Emeralds: Durability, Limited Supply Horses: NONE Gold Coins: Durability, Divisibility, Uniformity, Limited Supply, Acceptability Seashells: None Currency: All

How well do you know U.S. currency? How many denominations of U.S. paper currency are there? 7 (1, 2, 5, 10, 20, 50, 100)

How well do you know U.S. currency? Who is on the $1 bill? George Washington

How well do you know U.S. currency? Who is on the $2 bill? Thomas Jefferson

How well do you know U.S. currency? Who is on the $5 bill? Abraham Lincoln

How well do you know U.S. currency? Who is on the $10 bill? Alexander Hamilton

How well do you know U.S. currency? Who is on the $20 bill? Andrew Jackson

How well do you know U.S. currency? Who is on the $50 bill? Ulysses S. Grant

How well do you know U.S. currency? Who is on the $100 bill? Benjamin Franklin

How well do you know U.S. currency? How many of the people pictured on U.S. currency never served as president? 2 Alexander Hamilton (First Secretary of the Treasury) Benjamin Franklin (Statesman)

How well do you know U.S. currency? Who is responsible for choosing the portraits on our currency? Secretary of the Treasury

How well do you know U.S. currency? What requirements does the Treasury Department have for someone whose picture is on U.S. Currency? Someone well known Someone who is deceased

How well do you know U.S. currency? The Treasury Department has announced that a new picture is going on our currency in 2020. What bill is getting a new face? $10

With a group of NO MORE than 4 total people… You are going to choose a denomination of U.S. currency and replace the image with someone else. Keep in mind the requirements of the Treasury Department (well known and deceased) Make sure to include… Who you are going to replace (give plenty of background information about this person…who are they, why are they famous, etc.) Who is going to replace them (be sure to thoroughly explain why they deserve to be on the currency more than the person they are replacing)

SOURCES OF MONEY’S VALUE (Fill in using p. 246-248) MEANING EXAMPLES Commodity Objects that have value in themselves and are used for money Wheat, sheep, etc. Representative Does not have value itself, but represents something that does Gold/silver certificate, gift card Fiat Has value because the government has declared it an acceptable means to pay debt U.S. currency

On a clean sheet of paper, answer 6-10 on page 248 On a clean sheet of paper, answer 6-10 on page 248. You do not have to write the questions, but your answers should be in complete sentences.

The History of American Banking Section Two

The First Bank of the U.S. Congress issued a 20 year charter in 1791, and it brought stability to American banking. Many people feared it would only lend to the rich. The Second Bank of the U.S. Congress issued a 20 year charter in 1816. Restored order to the banking system, but President Jackson vetoed the renewal of the bank’s charter in 1832.

Two Advantages of the Gold Standard It set a definite value for the dollar so people could redeem the value of their paper money at any time. The government could only issue currency if it had gold to back it up, preventing the government from printing too much.

The Federal Reserve System Created in 1913 and reorganized the national banking system into: The Federal Reserve System is made up of 12 districts Federal Reserve Board: appointed by the President and oversee all Federal Reserve Banks Short-term loans: allow member banks to take out loans to meet short term demands The Fed issues Federal Reserve Notes, the currency used in the U.S.; allows the Federal Reserve to increase/decrease money supply according to needs. Federal Deposit Insurance Corporation (FDIC): insures a customer’s deposits up to $250,000 per insured bank.

Federal Reserve Districts

Banking Today Section Three

Money Supply M1: easily turned into cash (liquid) M2: cannot be directly used as cash Cash Checking accounts (Demand Deposits) Traveler’s checks All of M1 Savings accounts Money market funds

Functions of Financial Institutions Storing Money Saving Money Savings Accounts Money Market Accounts Certificate of Deposit (CD) Loans Mortgages Credit Cards