SOL 12b Economic Flow

Resources, goods and services, and money flow continuously among households, businesses, and markets in the U.S. economy.

Businesses (producers) buy the resources; make products that are sold to individuals, other businesses, and the government; and use the profits to buy more resources. Taxes Public goods and services Individuals/households (consumers) own the resources used in production, sell the resources, and use the income to purchase products.

Individuals - (households) own the resources used in production, sell the resources, and use the income to purchase products.

Businesses (producers) buy resources; make products that are sold to individuals, other businesses, and the government; and use the profits to buy more resources.

Individuals and businesses saving and investment provide financial capital that can be borrowed for business expansion and increased consumption

Governments use tax revenue from individuals and businesses to provide public goods and services. (roads, post offices, military)

Quiz

What concept in economics is the diagram above illustrating? Businesses (producers) buy the resources; make products that are sold to individuals, other businesses, and the government; and use the profits to buy more resources. Tax es Public goods and services Individuals/households (consumers) own the resources used in production, sell the resources, and use the income to purchase products. What concept in economics is the diagram above illustrating? Supply and demand Equilibrium price Circular flow of the economy Opportunity cost

Individuals - (households) own the resources used in production, sell the resources, and use the income to purchase products. What is the most common resource that individuals (households) sell to businesses?

Businesses (producers) buy resources; make products that are sold to individuals, other businesses, and the government; and use the profits to buy more resources. What do businesses receive for the goods and services they provide?

Individuals and businesses saving and investment provide financial capital that can be borrowed for business expansion and increased consumption What is the term for the money that individuals (households) save and invest in business?

Governments use tax revenue from individuals and businesses to provide public goods and services. (roads, post offices, military) Give two examples of public goods and services.

Governments use tax revenue from individuals and businesses to provide public goods and services. (roads, post offices, military) Do governments get the money to provide public gods and services with taxes on individuals only, taxes on businesses only, or from taxes on both individuals and businesses?

SOL 12c Financial Institutions

How Banks Work Answer the following questions in your group: A bank keeps all of the money that is deposited in a safe. (T or F) Banks cannot loan out more money than they have in deposits. (T or F) What are 3 reasons why people put their money in a bank.

What is a bank? What is a bank? How do banks make a profit? Answer the following questions in your group: What is a bank? How do banks make a profit? Explain how banks are critical to our economy. How do banks create money in the economy? If a bank receives a deposit of $1000 (& has a reserve requirement of 10%, how much can the bank loan out?

How do banks make money List 3 ways that banks make money. Answer the following questions in your group: List 3 ways that banks make money. Interest rates are affected by the number of people who want to borrow and the amount of money the bank has available to lend. (T or F) Generally, the riskier the loan, the lower the interest rate the bank charges. (T or F) What are securities?

Types of Banks Answer the following questions in your group: What type of bank was originally set up to provide services for businesses? Now, most commercial banks offer accounts to everyone. (T or F) What are thrift institutions? What were Savings Banks originally founded to do? What were Savings and Loans established to do? How were credit unions started and what are they designed to do?

Private financial institutions act as intermediaries between savers and borrowers that include households and business investors.

What is an intermediary? A person who acts as a link between people in order to try to bring about an agreement or reconciliation.

Characteristics of private financial institutions Include banks, savings and loans, and credit unions.

Characteristics of private financial institutions Receive deposits and make loans

Characteristics of private financial institutions Encourage saving and investing by paying interest on deposits.

Quiz

List three kinds of financial institutions commonly found in this country.

When you deposit money in a financial institution, most of it is: Kept in the bank safe Loaned out Invested for you

How is the financial institution shown above different from a regular bank?

4. What are “S & Ls”?

What do financial institutions do to encourage people to save and invest?

SOL 13d Federal Reserve

The Federal Reserve Bank

1. What is the Federal Reserve System?                                                                                            Click on each question or scroll down for the response. Don't forget to test your knowledge with the Kids Quiz at the end!    What is the Federal Reserve System? Who created the Federal Reserve, and when was it created? What is the Board of Governors? Who are the members of the Board of Governors? Where is the Federal Reserve Board of Governors located? What are the twelve Federal Reserve Districts? What are some of the main responsibilities of the Federal Reserve System? What are interest rates and why are they important? What is inflation? What is the FOMC, and what does it do?                                                                                                                          1.  What is the Federal Reserve System? The Federal Reserve System, also known as "The Fed," is the central bank of the United States. In its role as a central bank, the Fed is a bank for other banks and a bank for the federal government. It was created to provide the nation with a safer, more flexible, and more stable monetary and financial system. Over the years, its role in banking and the economy has expanded. The Federal Reserve System is a network of twelve Federal Reserve Banks and a number of branches under the general oversight of the Board of Governors. The Reserve Banks are the operating arms of the central bank. Learn more.                                                                                            Click on each question or scroll down for the response. Don't forget to test your knowledge with the Kids Quiz at the end!    What is the Federal Reserve System? Who created the Federal Reserve, and when was it created? What is the Board of Governors? Who are the members of the Board of Governors? Where is the Federal Reserve Board of Governors located? What are the twelve Federal Reserve Districts? What are some of the main responsibilities of the Federal Reserve System? What are interest rates and why are they important? What is inflation? What is the FOMC, and what does it do?                                                                                                                          1.  What is the Federal Reserve System? The Federal Reserve System, also known as "The Fed," is the central bank of the United States. In its role as a central bank, the Fed is a bank for other banks and a bank for the federal government. It was created to provide the nation with a safer, more flexible, and more stable monetary and financial system. Over the years, its role in banking and the economy has expanded. The Federal Reserve System is a network of twelve Federal Reserve Banks and a number of branches under the general oversight of the Board of Governors. The Reserve Banks are the operating arms of the central bank. Learn more. 1.  What is the Federal Reserve System? Also known as "The Fed“ The central bank of the United States. The Fed is a bank for other banks and a bank for the federal government. It was created to provide the nation with a safer, financial system. The Federal Reserve System is a network of twelve Federal Reserve Banks .

What are the twelve Federal Reserve Districts? Under the Federal Reserve System, the United States is divided into twelve regions, or Districts. The twelve Reserve Banks are named after the city in which they are located: Boston | New York | Philadelphia | Cleveland | Richmond | Atlanta | Chicago St. Louis | Minneapolis | Kansas City | Dallas | San Francisco

  Who created the Federal Reserve, and when was it created? Congress created the Federal Reserve System in 1913 as part of the Progressive Movement. America has had many boom and bust financial cycles. In 1907, after a bad bust, financial wizards tried to figure out a way to keep the economy from suffering financial panics, which always seemed to be followed by people running to the banks to withdraw all of their money.

Responsibilities of the Fed Maintain the value of our currency (dollar). Regulate banks to ensure the soundness of the banking system and the safety of deposits. Manage the amount of money in the economy to try to keep inflation low and stable. Act as the federal government’s bank.

Quiz

The federal reserve is the _______ bank of the United States. Private Public Central

The Federal Reserve is mainly responsible for regulating the nation’s _________. Choices Money supply Taxes Budget

The federal reserve has the main responsibility to maintain the _________ of the dollar. Color Value Size

SOL 13f Currency

Barter Money is defined as anything that is generally accepted as a method of payment.

When the U.S. government issues coins and currency, people accept it in exchange for goods and services because they have confidence in the government.

Government issues money to facilitate this exchange.

The 3 types of money generally used in the U.S.: Coins Federal Reserve Notes What is a federal reserve note? Deposits in bank accounts that can be accessed by checks and debit cards.

Quiz

The word “currency” refers to the ________ used in a particular country. Cars Taxes Money

Money has value because people accept it in exchange for goods and services, and have confidence in the nation’s _________. Gold supply Silver supply Government

“Federal Reserve Notes” are the _______ used in the United States. Coins Savings bonds Paper money

When the Federal Reserve keeps track of the money supply in the U. S When the Federal Reserve keeps track of the money supply in the U.S., it counts not just coins and paper money, but also deposits in bank accounts that can be accessed with checks or with _______ cards. Credit Debit Insurance