Chapter+13

=Chapter 13: Money and Financial Institutions=

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Chapter Objectives:

 * Understand the jobs, characteristics, and general history of money
 * Explain fractional reserve banking; calculate the deposit multiplier, and calculate how much money can be "created" from a deposit, given amount of deposit and the bank's reserve ratio
 * Name the components of the Money Supply of the US, and general types of "money" that they contain
 * Define: liquidity
 * Understand the general history and the responsibilities of the Federal Reserve System
 * Describe purchasing power and inflation, and provide examples of Cost-push and Demand-pull inflation
 * Identify those who are "helped" and "hurt" by inflation, and explain why

**Newspaper Application: "Holy Mackerel!" Using Pouches of Fish as Money in Prison!**
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=Extra Credit (Answer each question in 3-4 COMPLETE sentences to be considered for full credit):=

1. The savings and loan crisis of the 1980s revealed problems in our banking system and in the ethical principles of certain bankers and savings bank managers. Based on your understanding of banking and the roles banks play in our economy, what ethical obligations do bankers have to their depositors?

2. The Federal Reserve System has been called the nation's bank. a. Describe the services the Federal Reserve System provides banks throughout the nation. b. Describe the banking services the Federal Reserve provides the federal government. c. Is the fed or a similar regulatory agency necessary to oversee the banking system?