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15 Cards in this Set
- Front
- Back
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THE FEDERAL RESERVE
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THE CENTRAL BANK OF THE U. S.
IT IS THE BANK OF BANKS…WHERE BANKS GO WHEN THEY NEED MONEY. 12 FEDERAL RESERVE DISTRICTS IN THE U. S. Board of Governors: 7 members, including the Chairman Once appointed, President and Congress have little control over them. Governors make economic decisions without pressure from government |
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FUNCTIONS OF THE FED.
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2 main functions: bank regulation and consumer credit.
Holds all federal gov’t money. Sells gov’t bonds (borrows $ from citizens, banks, other countries. Issues national currency and controls its circulation. Deal with inflation ( too much $ in circulation) |
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Inflation
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Causes a rapid rise in prices and reduces the value of money.
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MONETARY POLICY
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INVOLVES CONTROLLING THE SUPPLY OF CURRENCY AND THE COST OF BORROWING
FED USES MONETARY POLICY TO DEAL WITH INFLATION. FED HAS THE POWER TO SPEED UP OR SLOW DOWN THE U.S. ECONOMY |
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FED HAS THE POWER TO SPEED UP OR SLOW DOWN THE U.S. ECONOMY
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1. RAISE INTEREST RATES ON LOANS TO SLOW SPENDING AND REDUCE THE AMOUNT OF $ IN CIRCULATION.
2. LOWER INTEREST RATES ON LOANS TO INCREASE SPENDING AND SPEED UP THE ECONOMY. PUTS MORE $ IN CIRCULATION. |
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FISCAL POLICY
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TAXING AND SPENDING POLICIES OF THE FEDERAL GOV’T.
CONGRESS & THE NATIONAL BUDGET |
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HOW BANKS OPERATE
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BANKING SERVICES:
1. ACCEPTING DEPOSITS: A. CHECKING ACCOUNTS B. SAVINGS ACCOUNTS: ADVANTAGES: EARN INTEREST, GET MONEY IMMEDIATELY, SAVE FOR FUTURE PURCHASES C. CERTIFICATES OF DEPOSIT (CD’s) PAY HIGHER INTEREST RATES THAN SAVINGS ACCOUNT, BUT CAN’T TOUCH $ FOR A PERIOS OF TIME (3 MONTHS, 6 MONTHS, 1 YEAR) 2. MAKING LOANS: Banks research your credit history (shows how you have paid back loans) Credit History determines your Credit Score. Credit Score is used to determine your eligibility for a loan. Credit Score high – easy to obtain a loan. Credit Score low – difficult to obtain a loan ***BANKS WILL SHARE YOUR CREDIT HISTORY WITH OTHER BANKS. KEEP IN MIND, BANKS USE YOUR DEPOSITS AS LOANS TO OTHERS. BANKS MAKE MONEY BY CHARGING HIGHER RATES FOR LOANS. YOU PAY THE BANK WHEN YOU BORROW $ |
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PAYDAY LOANS
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A PAYDAY LOAN IS A SMALL, SHORT-TERM LOAN SECURED AGAINST A CUSTOMER’S NEXT PAY CHECK.
CONVIENENT, BUT COMES WITH A VERY HIGH INTEREST RATE. |
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TYPES OF UNEMPLOYMENT
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FRICTIONAL UNEMPLOYMENT
STRUCTURAL UNEMPLOYMENT CYCLICAL UNEMPLOYMENT TECHNOLOGICAL UNEMPLOYMENT SEASONAL UNEMPLOYMENT UNDEREMPLOYMENT |
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FRICTIONAL UNEMPLOYMENT
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CAUSED BY PEOPLE MOVING BETWEEN JOBS.
CAUSED BY PEOPLE MOVING BETWEEN JOBS. |
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STRUCTURAL UNEMPLOYMENT
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OCCURS DUE TO A MISMATCH OF SKILLS IN THE LABOR MARKET. REQUIRES NEW SKILLS TO MEET LABOR DEMANDS.
CAUSED BY: 1. OCCUPATIONAL IMMOBILITY – DIFFICULTY IN LEARNING NEW SKILLS FOR A NEW INDUSTRY. 2. GEOGRAPHICAL IMMOBILITY – DIFFICULTY IN MOVING REGIONS TO GET A JOB. 3. TECHNOLOGICAL CHANGE – NEW TECHNOLOGY CAN DECREASE THE DEMAND FOR LABOR. ADVANTAGES OF STRUCTURAL UNEMPLOYMENT 1. IMPROVES STANDARD OF LIVING 2. LEARNING NEW SKILLS – MORE PRODUCTIVITY DISADVANTAGES: 1. LOSS OF INCOME 2. LOSS OF SELF- ESTEEM 3. LOSS OF PRODUCTIVITY |
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CYCLICAL UNEMPLOYMENT
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OCCURS WHEN ECONOMY IS BELOW FULL CAPACITY.
Not enough demand in the economy to provide jobs for everyone who wants to work. Demand for goods and services fall – less production, less need for workers. |
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TECHNOLOGICAL UNEMPLOYMENT
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THE REDUCTION IN THE NEED FOR LABOR BECAUSE OF CHANGES IN TECHNOLOGY.
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SEASONAL UNEMPLOYMENT
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WHEN UNEMPLOYMENT TENDS TO BE HIGHER DURING CERTAIN TIMES OF THE YEAR.
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UNDEREMPLOYMENT
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A SITUATION IN WHICH A WORKER IS EMPLOYED, BUT NOT AT THE DESIRED CAPACITY.
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