Chapter+10+Work

Chapter 10 Questions 1. Describe the three uses of money. 2. Explain the six characteristics of money. 3. Give examples of **commodity money, representative money,** and **fiat money.** 4. Why does the U.S. currency have value? 5. Why did continentals become worthless? 6. What material(s) would you use if you were creating a new United States coin? WHY???? 7. Pretend you live in a society that has a **barter** economy...What difficulties might you encounter in paying for such services as medical care and education?
 * 1) Exchange, unit of account, and as a store of value
 * 2) durability, portability, divisibility, uniformity, limited supply, acceptability,
 * 3) salt and cattle were commodity, representative are IOUs and notes, flat money federal notes or cash monies
 * 4) Because The Man says so
 * 5) Because the people believed they would not be able to redeem their bills for silver and gold coins
 * 6) Aluminum or zinc because its cheap and durable
 * 7) how would you barter something as long as education or as helpful as medical care? The concept of bartering is good in theory but would you paint a wall in exchange for something as valuable as leg surgery? it doesnt make it logical or fair to the person offering the most "valuable" service.

Questions: 1. Describe the shifts between centralized and decentralized banking before the Civil War. 2. Explain how the banking system was stabilized in the later 1800s. 3. Describe developments in banking during the 20th century.
 * 1) The federalists first appointed Alexander Hamilton for secretary of the treasury in 1789 and he proposed a national bank that could issued a single currency for the entire nation and more but then the bank functioned only until 1811 when its charter ran out. Congress chartered the second bank of the united states in 1816 and it was to rebuild the public's confidence in a national banking system.
 * 2) In the 1870's the nation adopted a gold standard which is a monetary system in which paper money and coins are equal to the value of a certain amount of gold. The banking system was stabilized through gaining the power to charter banks, power to require banks to hold adequate gold and silver reserves to cover their bank notes, and the power to issue a single national currency.
 * 3) Many developments in banking have occurred during the 20th century such as the creation of a single national currency, member banks, federal reserve board, short-term loans and federal reserve notes. Deregulation, high interest rates and bad loans have also influenced the banking system because it was the cause of the savings and loans crisis.

Read 10.3 Answer the following questions completely 1. Explain how the money supply in the United States is measured. What does M1 and M2 represent. 2. Explain the functions of financial institutions. 3. How does a bank make money? 4. What are the different types of financial institutions? 5. How has Electronic Banking changed the way we bank? How has it changed the way a bank does business?

Quiz pg. 266 #1-8, 10-14
 * 1) commodity
 * 2) currency
 * 3) debit card
 * 4) mortgage
 * 5) FDIC
 * 6) demand deposit
 * 7) fiat money
 * 8) liquidity
 * 9) To serve as a medium of exchange, a unit of account, and to store value
 * 10) its durable, portable, divisible, uni-formal, in limited supply, and is accepted.
 * 11) With the development of the federal reserve system and the FDIC American banking has been more stabilized since the great depression
 * 12) A banking system that keeps only a fraction of funds on hand and lends out the remainder
 * 13) Automated teller machines, debit cards, home banking, automatic clearing houses, and stored value cards are all examples of electronic banking.
 * 1) Automated teller machines, debit cards, home banking, automatic clearing houses, and stored value cards are all examples of electronic banking.