rformance Standards: Social Studies Economics Micro #1) nt will describe how households, s, & governments are interdependent & through the flows of goods, services, & m the role of money & how it facilitates e. ocial Studies Economics Macro #2) nt will explain the role & functions of t eserve System. e the organization of the Federal Reserve
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Georgia Performance Standards:SSEMI1 (Social Studies Economics Micro #1)The student will describe how households,businesses, & governments are interdependent & interact through the flows of goods, services, & money.b.Explain the role of money & how it facilitates
exchange.
SSEMA2 (Social Studies Economics Macro #2)The student will explain the role & functions of theFederal Reserve System.c. Describe the organization of the Federal Reserve
System.
The Federal Reserve System
FUNCTIONS of Money1. Medium of Exchange-
something accepted by all parties as payment for G/S
2. Measure of Value (unit of accounting): common denominator that can be used to
express worth in terms that most people can understandEx: dollar, pound, yen, ruble, peso, Euro-
useful in comparing values of different items3. Store of Value-
for use later in the economy; saved until needed
CHARACTERISTICS OF MONEY:
DURABLE- PAPER MONEY LASTS ABOUT 1 YEAR
PORTABLE- CARRIED EASILY
DIVISIBLE- MAKE PURCHASES INTO ANY AMOUNT
LIMITED AVAILABILITY (limited in supply)- LOSES VALUE WHENEVER TOO MUCH IS PRODUCED
CW 3/21/11: MONEYEach group has been assigned a productUse pages 285-290 of your book to explain thefollowing for your product:1. a) What functions of money could it fulfill, if any?
b) How so or not so?2.a)What characteristics of money does it fulfill, if any?
b) How so or not so?
Read Cybernomics whole group pg. 2863. a) Does cybercurrency fulfill the functions & characteristics of money? b) Why or why not? c) Do you think that paper & coin money will
eventually disappear? d) Why or why not?
Federal Reserve System (FED)
• Created in 1913 under President Wilson
FED Duties Conducts nation’s monetary policy (control money supply) Regulates banksMaintains stability of financial system
Provides Services to…..
A. U.S. Gov’t Banks
B. Banks- clears checks and makes loans
C. Foreign Financial Institutions
D. Distributes Currency
“FAMILY TREE” of the Federal Reserve System
FED (Great-Grandparents)
Advisory Councils(Great Aunts/Uncles)
FOMC
DISTRICT BANKS (Grand-Parents)
BRANCH BANKS (Parents)
MEMBER BANKS (Grandchildren)
Board of Governors
ORGANIZATION OF FEDBoard of Governors (7 members total)
Members6Serve 14 year terms
Chair1 Serves 4 year term Currently: Ben Bernanke
AllAppointed by the PresidentApproved by the Senate
ORGANIZATION OF FEDAdvisory Councils (advise Board of Governors)
Federal Advisory CouncilRep from each District BankAdvise on overall health of economy
Consumer Advisory CouncilReps from education & consumer
industriesAdvise 3 times/yr on consumer
credit lawsThrift Institution Advisory Council
Reps from financial institutionsAdvise 3 times/yr on savings matters
ORGANIZATION OF FEDFederal Open Market Committee (FOMC)
Voting Members (12 total) Board of Governors President of NY District FED 4 Presidents from other District Banks (serve 1 yr on FOMC on rotating basis)Function Meet 8 times per year in Washington D.C. Review status of economy Set FED Monetary Policy
ORGANIZATION OF FED12 FED District Banks
Independent of other district banksEach has own President & BoardSupervised by the FEDFunction:
Act as a bank for member banks
25 FED Branch Banks
Thousands of Member Banks
12 FED – District Banks and 25 FED Branch Banks
$1 Bill – Where did it come from?
1. Name of City in Seal2. # of District Bank3. Letter of District Bank