Money and Monetary Policy

What are The Three Uses (functions) of Money

Medium of exchange, Unit of Account, Store of Value

What is A Medium of Exchange

Anything that is used to determine value during the exchange of goods

What is A Unit of Account

A means for comparing the values of goods and services

What is A Store of Value

Something that retains value over time

What are the 6 characterustics of money?

Durability, Potability, Divisibility, Uniform/Stable, Limited Supply, Acceptability

What is the Uniform/Stable Characteristic?

We must be able to count and measure money accurately

What is the Limited Supply Characteristic?

An overabundant money supply can lead to inflation or hyperinflation. Prevention of Counterfeit money.

What is the Acceptability Characteristic?

Something must give money it’s value. Without confidence in our currency, money would be worthless…

What is Commodity Money?

Objects that are used as money because they have value (Gold/silver coins)

What is Representative Money?

Objects that have value because they can be exchanged for something else of value

What is Fiat Money?

Money that has value because the Gov. has ordered it be accepted as a way to pay debts

What is the Federal Reserve?

The central bank of the U.S.

The Federal Reserve system is divided into __ districts
nationwide

12

The Federal Reserve system has __ branches

24

The Federal Reserve system has approx. ____ member banks

2,500

The Federal Reserve system is overseen by the _____ ___ _____

Board of Governors

The Board of Governors consists of ___ members who are reappointed every ___ years.

14

The chairman of the Board of Governors serves a renewable ___ year term

4

_ serves as a ___?

Government banker & agent
(Issues social securiyt checks, tax refunds, and handles gov bonds (Buys and sells, ussues interest payments..))

The Federal Reserve issues ____?

Currency
(Controls printing & Shreds currency)

The Federal Reserve regulates banks by?

Supervision, Lender of last resort, Check clearing, and Monitors bank reserves

The Federal Reserve sets the Federal Funds rate which is?

Interest rate charged for overnight lending between banks