Presentation on theme: "Warm up 1. What is the difference between arbitration and mediation when a third party is involved in contract disputes? 2. What is the difference between."— Presentation transcript:
Warm up 1. What is the difference between arbitration and mediation when a third party is involved in contract disputes? 2. What is the difference between a strike and a lockout? 3. Why is money important and/or useful to you?
7.4 Identify the role of money in the economy. And some other economic indicators
3 Uses of Money 1. Medium of Exchange accepted for goods and services Can be any object 2. Unit of Account Means of comparing the values of goods and services 3. Store of Value Money keeps its value in two forms: currency (bills and coins) and deposits (pay debts, convert to currency)
Interest Cost paid for borrowing money You pay interest on your loans The bank pays you interest for money you lend them too
inflation Prices go up on everything which means the value of money goes down!
Deflation The value of money goes up and prices go down
The Consumer Price Index CPI A measure of the prices for essential goods This is how inflation/deflation is measured
Civilian Labor Force Americans who have jobs or are seeking a job, are at least 16 years old, are not serving in the military and are not institutionalized. In other words: all Americans that are eligible to work.
Measuring Unemployment Unemployment is the measure of all Americans who are eligible to work AND currently seeking employment.
Federal Reserve Act of 1913 created the Federal Reserve System (The Fed) goal: A stable Economy maximum employment stable prices moderate interest rates
The FED affects the economy through Monetary Policy Controlling the amount of money and interest rates offered to private banks. Reserve Requirement – the amount of money in the Federal Reserve Banks
2 Monetary Policies Easy-money policy reduces rates, lowers reserve requirement, prints currency= more money in economy Tight-money policy increases rates, raises reserve requirement= less money in the economy
Interest Rates Prime rate rate of interest for short term loans (to good customers or other banks) Discount (key) rate cost of borrowing from the Fed Reducing the rate- encourages banks to borrow more money so they lend more to other people Increasing the rate - slows down economy by discouraging borrowing
The debate Pros 1. established a national currency. Prior to the Fed, there were over 30,000 currencies in the USA. 2. protects small banks 3. helps to control inflation and deflation 4. The Federal Reserve helps to represent America and its financial interests. 5. Audit smaller banks… this helps with corruption Cons considered unconstitutional Makes government larger while it is a government institution, is still run by an individual often cozier with private interests than public interests. Lobbyist influence policy = corruption