Upload
timothy-smith
View
2.670
Download
2
Embed Size (px)
DESCRIPTION
Citation preview
1
Money and the Federal Reserve System
2
barterThe direct exchange of one good for another good, rather than for money
3
What is the problem with barter?
It requires a coincidence of wants
4
moneyAnything that serves as a medium of exchange, unit of account, and store of value
5
advantage of money
simplifies and therefore increases market transactions
6
functions of money• Medium of exchange• Unit of account• Store of value
7
medium of exchangewidely accepted in exchange for goods and services
8
unit of account (standard of value)
provide a common measurement of value of goods and services
9
store of value ability of money to hold value over time
10
Are credit cards money?No, credit cards fail to meet the store-of-value criterion and are therefore not money
11
What are other properties of money?
Money must be …• portable• divisible• uniform• acceptable
12
Is our money backed by gold or silver?
No, our paper money was exchangeable for gold until 1934, and in 1963 Congress removed the right to exchange $1 bills for silver
13
fiat moneyMoney accepted by law and not because of redeemability or intrinsic value
14
What makes our dollar bills fiat money?
All our bills claim that “This note is legal tender for all debts public and private”
15
legal tenderLegally dollar bills cannot be refused as payment for a debt
16
currencyMoney, including coins and paper money
17
the Federal Reserve System
The 12 central banks that service banks and other financial institutions within each of the Federal Reserve districts
18
19
Ben BernankeChairman of the Board of Governors of the Fed
20
What does a federal reserve bank do?
• Controls the money supply• Clears checks• Supervises and regulates banks• Maintains and circulates currency• Protects consumers• Maintains federal government
checking accounts and gold
21
What is the Federal Deposit Insurance
Corporation?The FDIC is a government agency established in 1933 to insure commercial bank deposits up to a specified limit