1. Coin

5. 1. Coin • Forms of money such as pennies, nickels dimes…..

6. 1. Coin

7. 2. Currency • Money that is both coins and paper money.

12. 3. Commercial Bank • Financial institutions that offer full banking services to individuals and businesses.

13. 4. Savings and Loan Association • Institutions that loan money to people buying houses.

14. 5. Credit Union • Essentially banks that work as a non-profit instititution.

16. 6. Federal Deposit Insurance Corporation • Federal corporation that insures individual bank accounts.

18. 7. Central Bank • When banks need money they borrow from a central bank. • In America, that central bank is the Federal reserve system.

19. 8. Federal Open Market Committee • Policy making group within the Federal Reserve system.

20. 9. Monetary Policy • Controlling the supply of money and the cost of borrowing money according to the needs of the economy.

21. 10. Discount Rate • The rate the Fed charges banks for loaning them money.

22. 11. Reserve • Percentage of money banks must keep against their deposits.

23. 12. Open Market Operations • How the Fed changes the money supply.

24. 13. Checking Account • Bank account allows members to write checks or use debit cards.

25. 14. Savings Account • Accounts for individuals with higher interest rates than a checking account.

26. 15. Certificate of Deposit • Customers loan banks money in exchange for interest, over a specific period of time.

29. In this lesson, students will be able to identify characteristics of money. Students will be able to identify and/or define the following terms: Money Commodity Money Representative Money Fiat Money Money

31. We use it every day but what is money?

32. Money • A medium of exchange, a unit of account, and a store of value. • Money measures value during the exchange of goods and services.

33. What is the value of a Chainsaw? 2. When we purchase goods, we use money as a medium of exchange.

34. Money • As a unit of account, money is a way to compare the value of goods and services. • A more expensive chainsaw, is considered more valuable than a cheaper Chainsaw.

35. Money • Finally, money is a store of value. • Money holds its value even if it is not used though inflation affects money.

36. An expensive price tag tells us something about the good’s value.

37. And if we don’t spend it today, that’s O.K., too. Money is a store of value. It keeps its value unless inflation occurs.

38. But I don’t have to tell you about inflation. You know all about rising prices. You’ve been to the gas station.

40. 3. Not All Money is the Same • Commodity money can be used as money but also has value in itself. • An example of commodity money is salt. Salt was once used in some societies as money. • Salt could be used as money or eaten.

41. Long ago, in some societies, salt was used as money. Salt is an example of commodity money. Salt can be used as money or eaten.

42. 4. Representative Money • is another type of money. • An example of representative money is an I.O.U….. • The paper that the I.O.U. is written on can be exchanged for something valuable.

43. Our dollars were once backed by gold. You could exchange a dollar for gold.

44. 5. Fiat Money • Fiat money is our money today. • Our money is money because the government states that it is an acceptable means to pay debts. • In other words, its money because the government says so.

45. Its money because the government says so. Its fiat money.

46. Six Characteristics of Money • Do we use pigs or salt or gold as money or paper as money? How does a society decide?

47. 6. Six Characteristics of Money • There are six characteristics of good money. $$$ should be…. • Portable • Divisible, • Durable, • Uniform, • Accepted, • Have a limited supply. • Too much money in circulation means less value.

48. Questions for Reflection: • What is money? • Explain each of the three functions of money. • Provide an example of commodity money. • What is representative money? • How does fiat money differ from commodity money and representative money?