intro to the fed

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

PRODUCTS for Classwork:

1Pink, 4 Orange - Water2 Pink, 5 Orange - Oranges3 Pink, 6 Orange - Gold4 Pink, 7 Orange - Beads5 Pink - Corn6 Pink - Books7 Pink - Dried beans1 Orange - Blank Compact Discs2 Orange - Furs3 Orange - Pencils

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