1. Section Outline 1 of 7 Money and Banking Section 3: The Federal Reserve System I.The Federal Reserve System II.Organizing the Fed III.Functions of the Fed IV.Money and the Economy Section Reading Support Transparency

2. 2 of 7 Money and Banking Section 3: The Federal Reserve System Main Idea The Federal Reserve is an independent agency of the federal government. It regulates the banking industry and makes minor adjustments to balance the money supply and our economy. Key Terms Federal Reserve System Board of Governors

3. The Federal Reserve System The Federal Reserve System (Fed) regulates the nation’s money supply and banking system —The Fed provides important services to United States banks and regulates their activities. —Created by Congress in 1913 3 of 7 Money and Banking Section 3: The Federal Reserve System

4. 4 of 7 Money and Banking Section 3: The Federal Reserve System Organizing the Fed Federal Reserve Districts —The United States is divided into 12 Federal Reserve Districts. Board of Governors —Responsible for running the Federal Reserve System as a whole. —Ben Bernanke

5. 5 of 7 Money and Banking Section 3: The Federal Reserve System Functions of the Fed 1.Serving as the government’s bank 2.Serving as the citizen’s bank 3.Regulating the banks 4.Making loans to banks 5.Controlling the money supply

6. 6 of 7 Money and Banking Section 3: The Federal Reserve System Money and the Economy Inflation —A general rise in the prices of goods and services; reduces the buying power of people’s money —Can lead to increased demand for goods and services Recession —Slowdown in economic activity and production —Can lead to the decrease in demand for goods and services

7. Money and Banking: Section 3 Section Reading Support Transparency 7 of 7