1.
Money and the Federal
Reserve System
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2.
barter
The direct exchange of one
good for another good,
rather than for money
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3.
What is the problem
with barter?
It requires a
coincidence of wants
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4.
money
Anything that serves as
a medium of exchange,
unit of account, and
store of value
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5.
advantage of money
simplifies and therefore
increases market
transactions
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6.
functions of money
• Medium of exchange
• Unit of account
• Store of value
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7.
medium of exchange
widely accepted in
exchange for goods and
services
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8.
unit of account
(standard of value)
provide a common
measurement of value of
goods and services
8

9.
store of value
ability of money to
hold value over time
9

10.
Are credit cards money?
No, credit cards fail to
meet the store-of-value
criterion and are
therefore not money
10

11.
What are other
properties of money?
Money must be …
• portable
• divisible
• uniform
• acceptable
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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
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13.
fiat money
Money accepted by
law and not because
of redeemability or
intrinsic value
13

14.
What makes our dollar
bills fiat money?
All our bills claim that “This
note is legal tender for all
debts public and private”
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15.
legal tender
Legally dollar bills
cannot be refused as
payment for a debt
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16.
currency
Money, including coins
and paper money
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17.
the Federal Reserve System
The 12 central banks that
service banks and other
financial institutions
within each of the Federal
Reserve districts
17

18.
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19.
Ben Bernanke
Chairman of the Board of
Governors of the Fed
19

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
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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
21