Splash Screen. Chapter Intro 2 Section 1: What Is Money? The basis of the market economy is voluntary exchange. In the American economy, the exchange.

Slides:



Advertisements
Similar presentations
The American Economy Personal Finances ~~~~~ Banks and Banking
Advertisements

Key Concepts Financial Institutions Functions of the Federal Reserve System.
Read to Learn Compare and contrast three types of banks that are found in our economy. Explain the major functions of the Federal Reserve System in the.
Chapter 14: The Federal Reserve System McGraw-Hill/Irwin Copyright © 2013 by The McGraw-Hill Companies, Inc. All rights reserved. 13e.
Warmup  Why does the dollar on the left have value, while the one on the right does not?
20-1 McGraw-Hill/Irwin Understanding Business, 7/e © 2005 The McGraw-Hill Companies, Inc., All Rights Reserved. Chapter 2020 Understanding Money and Financial.
Bell Ringer 1.What type of financial institution offers full financial services and forms the largest part of the financial system? 2.What type of financial.
 This chapter addresses the following: ◦ How does government control the amount of money in the economy? ◦ Which government agency is responsible for.
Fiscal & Monetary Policy How the Federal Government can Influence the American Economy How the Federal Government can Influence the American Economy.
Money and Financial Institutions
The Fed and Monetary Policy
Money and Financial Institutions
How Banks Operate Chapter 24 Section 3. Words to Know Checking Account: An account in which deposited money can be withdrawn at any time by writing a.
The Federal Reserve System
Back to Table of Contents pp Chapter 12 Money and Financial Institutions.
Chapter 24.3 How Banks Operate. Banking Services Banks are started by investors, who pool their financial assets to provide banking services to people.
Economics: Principles in Action
Chapter 15: The Fed and Monetary Policy
Read to Learn Discuss the functions and characteristics of money. Discuss three main functions of a bank.
Chapter 10 Money and Banking Money Money is anything that serves 3 purposes: Money is anything that serves 3 purposes: –Medium of Exchange – used when.
Chapter 15 The Federal Reserve System & Monetary Policy
WARMUP  Why does the dollar on the left have value, while the one on the right does not?
The Federal Reserve and Monetary Policy
Vocabulary Currency- Coins and paper bills used to purchase goods/services. Certificate of Deposit- Earns a higher interest rate than a savings/checking.
The Federal Reserve System
Money and Banking Chapter 24. What is Money? Section 1.
Starter. Money and Banking What is Money? Functions of Money   1.medium of exchange 2. Store of value (hold wealth until ready to use) 3. Measure of.
Splash Screen. Chapter Menu Chapter Introduction Section 1:Section 1:Organization and Functions of the Fed Section 2:Section 2:Money Supply and the Economy.
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?
Unit 7 Evaluate the investment decisions made by individuals, businesses, and the government. Describe the role of money in trading, borrowing, and investing.
Money Fiat/Legal Tender – money that has value because a government fiat, or order, has established it as acceptable for payment of debts. Medium of Exchange.
Money, Banking, and the Federal Reserve
The Federal Reserve In Action. What is the Fed?  Central bank of the United States  Established in 1913  Purpose is to ensure a stable economy for.
Copyright © 2005 by South-Western, a division of Thomson Learning, Inc. All rights reserved. Chapter 17 Financial Management and Institutions.
Chapter 15 – The Fed and Monetary Policy
20-1 McGraw-Hill/Irwin Understanding Business, 7/e © 2005 The McGraw-Hill Companies, Inc., All Rights Reserved. Chapter 2020 Understanding Money and Financial.
Banks and Banking October 18, 2011 – Mr. Graboski Aim: What is the Federal Reserve System and what are its functions? Do Now: Write down one question you.
CHAPTER 24 Money and Banking. Functions of Money Medium of Exchange Store of Value Measure of Value.
CH. 24 MONEY & BANKING Standard EE 2.3, 3.3, PFL 1.5, 1.6.
Section 1: What is Money? Section 2: The Federal Reserve System.
Chapter 15 The Fed and Monetary Policy Section 1 p. 255 Terms: Member banks 407 commercial banks that are members of, and hold stock in, the Fed Federal.
Chapter 15: The Fed and Monetary Policy Chapter 15.1: The Federal Reserve System Chapter 15.2: Monetary Policy Chapter 15.3: Monetary Policy, Banking,
Money and Banks.
The Federal Reserve In Action. What is the Fed?  Central bank of the United States  Established in 1913  Purpose is to ensure a stable economy for.
The Federal Reserve In Action. What is the Fed?  Central bank of the United States  Established in 1913 (Federal Reserve Act of 1913)  Purpose is to.
Slide 14-1 THE FEDERAL RESERVE. Slide 14-2 The Federal Reserve System –Established in 1913 by the Federal Reserve Act –The central bank of the United.
The Federal Reserve System. Prior to 1913, hundreds of national banks in the U.S. could print as much paper money as they wanted They could lend a lot.
Warm UP 1.Explain Recession and Depression. 2.What caused the Great Depression.
The Federal Reserve and Monetary Policy Chapter 16.
Splash Screen. Chapter Menu Chapter Introduction Section 1:Section 1:What Is Money? Section 2:Section 2:The Federal Reserve System Section 3:Section 3:How.
MONEY AND BANKING. What is Money?  Money- anything that people are willing to accept in exchange for goods Types of Money  Coins- metallic forms of.
Chapter 24 What is Money?. What are the functions of money?  A medium of exchange-can be traded for what we need  Serves as a store of value-we can.
McGraw-Hill/Irwin © 2006 The McGraw-Hill Companies, Inc., All Rights Reserved. The Federal Reserve System Chapter 14.
Introduction to Business, Money and Financial Institutions Slide 1 of 65 Money and Financial Institutions.
WEDNESDAY EQ: What is money, who controls it, and what part does it play in our economy?!
McGraw-Hill/Irwin ©2008 The McGraw-Hill Companies, All Rights Reserved The Federal Reserve System Chapter 14.
Chapter Money. Section Preview Three basic functions of money Three basic functions of money The characteristics of money The characteristics of.
Chapter 17 Money and Banking.
The Federal Reserve System
FEDERAL RESERVE SYSTEM
Chapter 24 Notes: Money and Banking in the United States
Money and Banking Chapter 24.
Bell-Work List the different banking services that you and your family use everyday. Deposits, paying bills online, writing checks, paying for purchases.
PowerPoint # 8: The Federal Reserve
PowerPoint # 8: The Federal Reserve
The Federal Reserve and Monetary Policy
Click here to advance to the next slide.
Banking and the Federal Reserve
MONEY & BANKING FEDERAL RESERVE
Presentation transcript:

Splash Screen

Chapter Intro 2 Section 1: What Is Money? The basis of the market economy is voluntary exchange. In the American economy, the exchange usually involves money in return for a good or service. People are willing to accept money in exchange for goods, and financial institutions give people both a safe place to deposit their money or take out loans.

Chapter Intro 2 Section 2: The Federal Reserve System Political and economic institutions evolve to help individuals and groups accomplish their goals. The central bank of the United States is the Federal Reserve System. It controls the money supply, serves as the government’s bank, and watches over the banking industry.

Chapter Intro 2 Section 3: How Banks Operate Political and economic institutions evolve to help individuals and groups accomplish their goals. Banks offer important financial services to millions of people.

Chapter Preview-End

Section 1-Main Idea Guide to Reading Big Idea The basis of the market economy is voluntary exchange. In the American economy, the exchange usually involves money in return for a good or service.

Section 1 Money People are willing to accept money in exchange for goods.

Section 1 Money (cont.) Money serves different functions and comes in different forms. Functions: –Medium of exchange –Store of value –Measure of value

Section 1 Types: –Historically—salt, hides, gems, tobacco –CoinsCoins –CurrencyCurrency Money (cont.) Confidence in money gives value Features of U.S. Currency

Section 1 The Financial System Financial institutions give people a safe place to deposit their money or take out loans.

Section 1 The Financial System (cont.) Types of financial institutions: –Commercial banksCommercial banks –Savings and loan associations (S & L)Savings and loan associations (S & L) –Credit unionsCredit unions –All perform similar functions

Section 1 Regulation and insurance make the U.S. financial system one of the safest. The Financial System (cont.)

Section 1 Federal Deposit Insurance Corporation (FDIC) –Formed because of Great Depression –Protects individual accounts up to $100,000 The Financial System (cont.) Consumer confidence in banks fuels economic growth

Section 1-End

Section 2-Main Idea Guide to Reading Big Idea Political and economic institutions evolve to help individuals and groups accomplish their goals.

Section 2 Structure and Organization The central bank of the United States is the Federal Reserve System.

Section 2 Structure and Organization (cont.) The Federal Reserve System, or Fed, is the central bank of the U.S.central bank –Established in 1913 –Divided into 12 Federal Reserve Districts The Federal Reserve System

Section 2 Thousands of member banks in the Fed –Member banks are owners –Buy stock and earn dividends in the Fed Structure and Organization (cont.) The Federal Reserve System

Section 2 Economic decisions made by Board of Governors –President appoints, Senate ratifies seven members –One member chairs for four years –Free of political pressure Structure and Organization (cont.) The Federal Reserve System

Section 2 Different advisory councils report on: –Condition of economy by district –Financial institutions –Consumer loans Structure and Organization (cont.) The Federal Reserve System

Section 2 Federal Open Market Committee (FOMC) manipulates money supplyFederal Open Market Committee (FOMC) Structure and Organization (cont.) The Federal Reserve System

Section 2 Functions of the Fed The Fed controls the money supply, serves as the government’s bank, and watches over the banking industry.

Section 2 Functions of the Fed (cont.) The Fed: –Regulates banks –Controls the money supply –Holds the government’s money

Section 2 Two main regulatory functions: –Banking regulation –Consumer credit Functions of the Fed (cont.)

Section 2 Government’s bank –Holds government’s money –Sells bonds and Treasury bills –Issues currency Functions of the Fed (cont.)

Section 2 Sets monetary policy by controlling money supply and interestmonetary policy –Raises interest rate by contracting money supply –Lowers interest rate by expanding money supply Functions of the Fed (cont.) Monetary Policy and Interest Rates

Section 2 Fed tools: –Discount rate—lower rate stimulates economyDiscount rate –Raise and lower reserve requirements for member banksreserve –Open market operations—buying bonds stimulates economyOpen market operations Functions of the Fed (cont.) Monetary Policy and Interest Rates

Section 2 The Fed is effective because it can move quickly and fine-tune as needed. –Buying and selling bonds –Changes in interest rates Functions of the Fed (cont.) Monetary Policy and Interest Rates

Section 2-End

Section 3-Main Idea Guide to Reading Big Idea Political and economic institutions evolve to help individuals and groups accomplish their goals.

Section 3 Banking Services Banks offer important financial services for millions of people.

Section 3 Banking Services (cont.) Investors start banks –Need depositors for banks to grow –Interest from loans generates profits

Section 3 Deposits –Checking accounts—no interest or low interestChecking accounts –Savings accounts—higher interest for higher depositsSavings accounts –Certificates of deposit—set time period, higher interestCertificates of deposit –Banks make loans using deposits Banking Services (cont.)

Section 3 Changes in Banking Throughout American history, banking has become safer and more efficient.

Section 3 Changes in Banking (cont.) U.S. banking has become safer and more efficient with time. The National Bank chartered in 1791 –Supplied federal government –Many opposed it –Went out of business when charter lapsed

Section 3 Privately owned state banks issued currency until –National Banking Act –National currency –Federally chartered private banks Changes in Banking (cont.)

Section 3 Panic of 1907 –Federal Reserve Act of 1913 passed Changes in Banking (cont.)

Section 3 Great Depression –1930s –F. D. Roosevelt closed all banks –Only financially sound could reopen –Federal Deposit Insurance Corporation (FDIC) established Changes in Banking (cont.)

Section 3 The Savings and Loan Crisis –Late 1980s and early 1990s –High-risk loans –Hundreds of S&Ls failed –FDIC took over regulations of S&Ls Changes in Banking (cont.)

Section 3 The Gramm-Leach-Bliley Act –Passed in 1999 –Banking institutions can offer more services Changes in Banking (cont.)

A.A B.B Section 3 Do you agree that there could be a financial disaster like the Panic of 1907 today? A.Agree B.Disagree

Section 3-End

VS 1

VS 2

VS 3

VS-End

Figure 1

Figure 2A

Figure 2B

Figure 3

TIME Trans

DFS Trans 1

DFS Trans 2

DFS Trans 3

Vocab1 coin metallic form of money such as pennies, nickels, and dimes

Vocab2 currency both coins and paper money

Vocab3 commercial bank a financial institution that offers full banking services to individuals and businesses

Vocab4 savings and loan association (S&L) financial institutions that traditionally loaned money to people buying homes

Vocab5 credit union nonprofit service cooperative that accepts deposits, makes loans, and provides other financial services

Vocab6 obvious easily found, seen, or understood

Vocab7 medium a means of doing

Vocab8 central bank an institution that lends money to other banks; also, the place where the government does its banking business

Vocab9 Federal Open Market Committee (FOMC) the most powerful committee of the Fed, because it makes the decisions that affect the economy as a whole by manipulating the money supply

Vocab10 monetary policy policy that involves changing the rate of growth of the money supply in circulation in order to affect the cost and availability of credit

Vocab11 discount rate interest rate the Fed charges on its loans

Vocab12 reserve a certain percentage of deposits that banks have to set aside as cash in their own vaults or as deposits in their Federal Reserve district bank

Vocab13 open market operations purchase or sale of U.S. government bonds and Treasury bills

Vocab14 manipulate to handle with skill

Vocab15 contract to become smaller

Vocab16 checking account an account in which deposited money can be withdrawn at any time by writing a check

Vocab17 savings account an account in which customers receive interest based on how much money they have deposited

Vocab18 certificate of deposit (CD) timed deposit that states the amount of the deposit, maturity, and rate of interest being paid

Vocab19 initial the very first

Vocab20 principal the most important

Vocab21 behalf in the interest of

Help Click the Forward button to go to the next slide. Click the Previous button to return to the previous slide. Click the Home button to return to the Chapter Menu. Click the Transparency button from the Chapter Menu or Chapter Introduction slides to access the TIME Transparency that is relevant to this chapter. From within a section, click on this button to access the relevant Daily Focus Skills Transparency. Click the Return button in a feature to return to the main presentation. Click the Economics Online button to access online textbook features. Click the Reference Atlas button to access the Interactive Reference Atlas. Click the Exit button or press the Escape key [Esc] to end the chapter slide show. Click the Help button to access this screen. Links to Presentation Plus! features such as Graphs in Motion, Charts in Motion, and figures from your textbook are located at the bottom of relevant screens. To use this Presentation Plus! product:

End of Custom Shows This slide is intentionally blank.