Currency and the FED Currency features and history Federal Reserve System Functions of money

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Transcript of Currency and the FED Currency features and history Federal Reserve System Functions of money

  • Slide 1
  • Currency and the FED Currency features and history Federal Reserve System Functions of money
  • Slide 2
  • Objectives Identify the features of the $5 note that refer to the Federal Reserve Explain why Abraham Lincoln is featured on the $5 note Identify three functions of money Explain how the Federal Reserve supports moneys function as a store of value.
  • Slide 3
  • Terms used to describe money Money because it is exchanged for goods and services Currency because bills are a paper-based form of money as opposed to coins; Note because the phrase Federal Reserve Note is at the top of the face of the currency. (The term note is a formal term that we often interchange with the term bill.
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  • Who is pictured here?
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  • Who is pictured on each of these bills?
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  • Andrew JacksonUlysses S. GrantBenjamin Franklin George WashingtonThomas JeffersonAlexander Hamilton
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  • Are all seven people pictured on U.S. currency former presidents of the U.S.? NO! Hamilton and Franklin did not hold the office of president
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  • What are three adjectives that may describe the seven people pictured on currency Well-known historical figures Male Held elected office Deceased Popular
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  • Secretary of the Treasury Responsible for the selection of the designs, including the portraits, which appear on paper currency The portraits currently appearing on the various denominations of paper currency were adopted in 1929 when the size of the notes was reduced It was determined that portraits of presidents of the United States have a more permanent familiarity in the minds of the public then others Neal S. Wolin
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  • Treasury Department Records do not reveal the reason that portraits of these particular statesmen were chosen in preference to those of other persons of equal importance and prominence By law, only the portrait of a deceased individual may appear on U.S. currency and securities
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  • Question? Based on this information from the Bureau of Engraving and Printing, which prints currency, what are three adjectives that we could use to describe the selection of the poptrait for currency? Which of these descriptions fit Abraham Lincoln?
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  • Bureau of Engraving and Printing Reported that the reason Lincoln was selected for the $5 note was: because he followed Washington in the rank of American heroes and it seemed logical that Abes likeness should appear on the denomination having the second-largest circulation.
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  • Federal Reserve and $5 Bill Clues about the Federal Reserve on the $5 note Each year the Bureau of Engraving and Printing prints billions of notes (currency) for delivery to the Federal Reserve System also know as The Fed.
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  • Federal Reserve The Fed is the central bank of the U.S. It is composed of 12 regional Reserve banks located in cities across the nation from NYC to San Francisco. Board of Governors is in Washington D.C.
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  • Federal Reserve The Fed serves as a bank for banks and performs many services for financial institutions that a local financial institution performs for people. What services do banks provide for their clients?
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  • Regional Federal Reserve Banks Hold deposits for banks Store banks excess currency in the Fed vaults Provide currency for banks Provide check-clearing services
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  • Federal Reserve Bank Serves as a bank for the U.S. government Holds checking accounts for the government Receives revenue for the government such as tax payment Provides other U.S. Treasury services, such as issuing treasury notes for the government
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  • The Federal Reserve Responsible for managing the money supply of the U.S. Job is to make sure that the prices of goos and services are relatively stable over time.
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  • What function do you need from money? Buy stuff Make rich Provide a way to save
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  • Three Functions of Money Money is anything that serves these three functions: Medium of exchangeIt can be used to buy goods and services. Store of valueIt keeps its purchasing power over time. Unit of accountIt tells you how much different goods and services are worth.
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  • Based on the money criteria, which of the following would serve effectively as money? Bananas? Cows? Plastic coins?
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  • In the past people used to use: Tobacco Fish Shells Trading one thing for another (not money) is called bartering or barter. Didnt perform all three functions very well. U.S. currency and coin used today, does serve the three functions of money effectively
  • Slide 24
  • Fed Facts Handout Create a new $5 note that incorporates four facts about the Fed. Group will describe your newly designed currency and explain how the Fed facts relate to your design
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  • Handout 5: The Editors Inbox Read the messages on the following pages and Ms. Johnsons responses. Decide which response goes with each message by placing a number on the line next to the response. State whether the response e-mail is accurate and explain why or why not.
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