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2. Chapter Menu Chapter Introduction Section 1:Section 1:The Functions and Characteristics of Money Section 2:Section 2:History of American Money and Banking Section 3:Section 3:Types of Money in the United States Visual Summary

3. Chapter Intro 1 Governments strive for a balance between the costs and benefits of their economic policies to promote economic stability and growth.

4. Chapter Intro 2 When you think of the word money, what comes to mind? Besides coins and cash, what other types of money can you name? In this chapter, read to learn about the functions of money and the role of the banking system.

5. Chapter Preview-End

6. Section 1-Main Idea Section Preview In this section, you will learn about the different uses, characteristics, and types of money.

7. Section 1-Key Terms money medium of exchange barter unit of accounting store of value commodity money representative money fiat money legal tender Content Vocabulary

8. Section 1-Key Terms indicate convert transport Academic Vocabulary

9. A.A B.B C.C Section 1-Polling Question How much experience do you have dealing with money? A.A lot of experience B.A little experience C.No experience

10. Section 1 The Functions of Money Money functions as a medium of exchange, a unit of accounting, and a store of value.

11. Section 1 The Functions of Money (cont.) Economists identify money by certain functions.money Medium of exchange –Without money, people would have to barter. barter

12. Section 1 Unit of accounting The Functions of Money (cont.) Store of value – use of money to store for future time.Store of value –Price allows people to determine the better bargain and to keep accurate financial records.

13. A.A B.B C.C Section 1 Can you name some reasons that using money is more efficient than bartering? A.Many reasons B.Some reasons C.No reasons

14. Section 1 Characteristics of Money Any item to be used as money must first meet certain criteria.

15. Section 1 Characteristics of Money (cont.) Anything that people are willing to accept in exchange for goods can serve as money. However, some items are easier than others to use. View: Characteristics of MoneyCharacteristics of Money

16. A.A B.B C.C D.D Section 1 Which one of the following characteristics do you view as most important regarding money? A.Durability B.Portability C.Scarcity D.Acceptability

17. Section 1 Types of Money Today, all United States money is fiat money that is not backed by gold or any other commodity.

18. Section 1 Types of Money (cont.) Past mediums of exchange: –Commodity moneyCommodity money –Representative moneyRepresentative money

19. Section 1 Types of Money (cont.) Today all U.S. money is fiat money.fiat money It is considered legal tender.legal tender

20. A.A B.B C.C Section 1 Can you think of reasons that fiat money is better than commodity or representative money? A.Many reasons B.Some reasons C.No reasons

21. Section 1-End

22. Section 2-Main Idea Section Preview In this section, you will learn about important events in the history of U.S. money and banking and about present-day banking services.

23. Section 2-Key Terms overdraft checking electronic funds transfer (EFT) automated teller machine (ATM) Content Vocabulary

24. Section 2-Objectives issue vary Academic Vocabulary

25. A.A B.B C.C Section 2-Polling Question Have you witnessed any changes in banking or money in your lifetime? A.Many changes B.Some changes C.No changes

26. Section 2 History of American Banking Throughout history, instability in the banking system has contributed to business fluctuations.

27. Section 2 History of American Banking (cont.) The history of money in the U.S. is closely tied to the development of the nation’s banking system. View: Time Line of Money and BankingTime Line of Money and Banking

28. A.A B.B Section 2 Can you explain a change that you view as important in our nation’s monetary history? A.Yes B.No

29. Section 2 Banking Services The efficiency of banking services has increased as computer technology has reduced the dependence on paper.

30. Section 2 Banking Services (cont.) Banks and savings institutions offer a wide variety of services, including: –Checking accounts –Interest on certain types of checking accounts –Automatic deposit and payment –Storage of valuables

31. Section 2 –Transfer of money from one person to another. –Overdraft checkingOverdraft checking Banking Services (cont.)

32. Section 2 Banking changed greatly in the late 1970s with the computer. Electronic funds transfer (EFT) has increased speed and efficiency of banking.Electronic funds transfer (EFT) Most common feature of EFT is the automated teller machines (ATMs). automated teller machines (ATMs) The internet allows people to do their banking from home. Banking Services (cont.)

33. Section 2 There are some concerns with the use of EFT. The possibility of tampering and lack of privacy are drawbacks of EFT. The Electronic Funds Transfer Act of 1978 describes the rights and responsibilities of participants in EFT systems. Banking Services (cont.)

34. A.A B.B C.C Section 2 Would you do your banking online even with the threat of identity theft? A.Definitely B.Depending on the situation C.Not at all

35. Section 2-End

36. Section 3-Main Idea Section Preview In this section, you will learn about what counts as money and near money in the United States.

37. Section 3-Key Terms checking account checkable deposits thrift institutions debit card near moneys M1 M2 Content Vocabulary

38. Section 3-Objectives consist create Academic Vocabulary

39. A.A B.B C.C Section 3-Polling Question Can you think of other types of money aside from coins and dollar bills? A.Plenty of other types B.Some other types C.No other types

40. Section 3 Money and Near Moneys The money supply consists of not only bills and other coins, but also checking and savings deposits and certain other liquid investments.

41. Section 3 Money and Near Moneys (cont.) The Bureau of Mint makes all the coins in the United States. They account for about 5% of the currency in circulation. The rest consists of Federal Reserve Notes issued by Federal Reserve banks.

42. Section 3 Money and Near Moneys (cont.) The largest part of the money supply in the U.S. consists of checking accounts. These are also called checkable deposits.checking accountscheckable deposits Today all thrift institutions offer many of the same services as commercial banks.thrift institutions View: Managing a Checking AccountManaging a Checking Account

43. Section 3 The use of a credit card to purchase goods and services is not money. It is really a loan by the issuer of the card. A debit card, on the other hand, automatically withdraws funds from a checkable account.debit card Other assets are almost, but not exactly like money. Time deposits and savings account balances are near moneys.near moneys Money and Near Moneys (cont.)

44. A.A B.B C.C Section 3 Do you feel that the use of a credit card is wise? A.Definitely B.Somewhat C.Not at all

45. Section 3 The Money Supply Economists use both narrow and broad definitions of the money supply to measure the amount of money in circulation.

46. Section 3 The Money Supply (cont.) Two definitions of money supply are used in the United States today: –M1—narrowest definition of the money supplyM1 –M2—broader definition of the money supplyM2 View: M1 and M2M1 and M2

47. A.A B.B Section 3 Which do you think is a better definition of money supply? A.M1 B.M2

48. Section 3-End

49. VS 1 Money functions as a medium of exchange, a unit of accounting, and a store of value.

50. VS 2 All money, whether bills, coins, or some other item, must have specific characteristics.

51. VS 3 Money and near moneys include bills, coins, checkable deposits, savings accounts, debit and credit cards, and time deposits.

52. VS-End

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59. Concept Trans Menu Economic Concepts Transparencies Transparency 5Economic Institutions and Incentives Transparency 6Exchange, Money, and Interdependence Select a transparency to view.

60. Concept Trans 1

61. Concept Trans 2

62. DFS Trans 1

63. DFS Trans 2

64. DFS Trans 3

65. Vocab1 money: anything customarily used as a medium of exchange, a unit of accounting, and a store of value

66. Vocab2 medium of exchange: use of money for exchange for goods or services

67. Vocab3 barter: exchange of goods and services for other goods and services

68. Vocab4 unit of accounting: use of money as a yardstick for comparing the values of goods and services in relation to one another

69. Vocab5 store of value: use of money to store purchasing power for later use

70. Vocab6 commodity money: a medium of exchange such as cattle or gems that has value as a commodity or good aside from its value as money

71. Vocab7 representative money: money that is backed by an item of value, such as gold or silver

72. Vocab8 fiat money: money that has value because a government fiat, or order, has established it as acceptable for payment of debts

73. Vocab9 legal tender: money that by law must be accepted for payment of public and private debts

74. Vocab10 overdraft checking: checking account that allows a customer to write a check for more money than exists in his or her account

75. Vocab11 electronic funds transfer (EFT): system of transferring funds from one bank account directly to another without any paper money changing hands

76. Vocab12 automated teller machine (ATM): unit that allows consumers to do their banking without the help of a teller

77. Vocab13 checking account: account in which deposited funds can be withdrawn at any time by writing a check

78. Vocab14 checkable deposits: funds deposited in a bank that can be withdrawn at any time by presenting a check

79. Vocab15 thrift institutions: mutual savings banks, S&Ls, and credit unions that offer many of the same services as commercial banks

80. Vocab16 debit card: device used to make cashless purchases; money is electronically withdrawn from the consumer’s checkable account and transferred directly to the store’s bank account

81. Vocab17 near moneys: assets, such as savings accounts, that can be turned into money relatively easily and without the risk of loss of value

82. Vocab18 M1: narrowest definition of the money supply; consists of moneys that can be spent immediately and against which checks can be written

83. Vocab19 M2: broader definition of the money supply; includes all of M1, plus such near moneys as savings deposits, small denomination time deposits, money market deposit accounts, and retail money market mutual fund balances

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