money and banking chapter 10. money section one
TRANSCRIPT
Money and Banking
Chapter 10
MoneySection One
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
Copy down the following items. Rank them in terms of their usefulness as money, with 1 being
the best and 6 being the worst.
0SUGAR0EMERALDS0HORSES0GOLD COINS0SEASHELLS0CURRENCY
The 6 Characteristics of Money0Durability: must withstand physical wear and tear
that comes with being used over and over.0Portability: must be able to be carried around for
daily use.0Divisibility: must be easily divided into smaller
denominations.0Uniformity: must be able to be counted and
measured accurately0Limited Supply: must be able to control the amount
available0Acceptability: 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.
0Sugar: Divisibility (ounces, pounds, etc.), Uniformity0Emeralds: Durability, Limited Supply0Horses: NONE0Gold Coins: Durability, Divisibility, Uniformity,
Limited Supply, Acceptability 0 Seashells: None0Currency: 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?
2Alexander 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 knownSomeone 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…
0You are going to choose a denomination of U.S. currency and replace the image with someone else.
0Keep in mind the requirements of the Treasury Department (well known and deceased)
0Make sure to include…0Who you are going to replace (give plenty of background
information about this person…who are they, why are they famous, etc.)
0Who 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)SOURCES 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. You
do not have to write the questions, but your answers
should be in complete sentences.
The History of American BankingSection Two
0The First Bank of the U.S. 0Congress issued a 20 year charter in
1791, and it brought stability to American banking.0Many people feared it would only lend to
the rich.0The Second Bank of the U.S.
0Congress issued a 20 year charter in 1816.0Restored order to the banking system,
but President Jackson vetoed the renewal of the bank’s charter in 1832.
Two Advantages of the Gold Standard
0It set a definite value for the dollar so people could redeem the value of their paper money at any time.0The government could only issue
currency if it had gold to back it up, preventing the government from printing too much.
The Federal Reserve System0 Created in 1913 and reorganized the national banking
system into:0 The Federal Reserve System is made up of 12
districts 0 Federal Reserve Board: appointed by the President and
oversee all Federal Reserve Banks0 Short-term loans: allow member banks to take out loans
to meet short term demands0 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.
0 Federal Deposit Insurance Corporation (FDIC): insures a customer’s deposits up to $250,000 per insured bank.
Federal Reserve Districts
Banking TodaySection Three
Money Supply
M1: easily turned into cash (liquid)
M2: cannot be directly used as
cash0Cash0Checking
accounts (Demand Deposits)
0Traveler’s checks
0All of M10Savings
accounts0Money market
funds
Functions of Financial Institutions
0Storing Money0Saving Money
0 Savings Accounts0Money Market Accounts0Certificate of Deposit (CD)
0Loans0Mortgages0Credit Cards