Banking and Finance

1. Banking and Finance

2. Virginia Standards of Learning CE.12 The student will demonstrate knowledge of the structure and operation of the United States economy by b) explaining the circular flow that shows how consumers (households), businesses (producers), and markets interact; c) explaining how financial institutions channel funds from savers to borrowers; CE.13 The student will demonstrate knowledge of the role of government in the United States economy by d) explaining how the Federal Reserve System acts as the nation’s central bank f) recognizing that government creates currency and coins and that there are additional forms of money. CE.14 The student will demonstrate knowledge of personal finance and career opportunities by e) describing the importance of education to lifelong personal finances; f) examining the financial responsibilities of citizenship, including evaluating common forms of credit, savings, investments, purchases, contractual agreements, warranties, and guarantees.

3. Student objectives • Explain circular flow in the economy. • Explain how financial institutions encourage savings and investing. • Explain how the Federal Reserve System acts as the nation’s central bank. • Recognize that government creates currency and coins and that there are additional forms of money. • Describe the importance of education to lifelong personal finance. • Examine the financial responsibilities of citizenship.

4. Describe circular flow in the economy. • Individual and business saving provide financial capital for borrowing • Individuals own resources, sell resources, and use the income to buy more resources • Businesses buy resources, make and sell products, and use profits to buy more • Government uses tax revenue to provide public goods and services

5. List three characteristics of private financial institutions • Includes banks, savings and loans, and credit unions • Receive deposits and make loans • Encourage savings and investment by paying interest on deposits

6. List four things the Federal Reserve System does as the central bank of the United States. • Maintain the value of the national currency (dollar) • Regulates banking • Manages the amount of money in the economy to maintain stability • Acts as the federal government’s bank

7. Why do people accept the value of currency? Because they have confidence in the United States government

8. List the three types of money. • Coins • Federal Reserve notes • Deposits that can be accessed by checks and debit cards

9. What does career planning start with? Self-assessment

10. What is the relationship between education and income? • Higher skills and/or education levels lead to higher incomes • Employers seek individuals who have kept pace with technological changes

11. List six ways to be financially responsible. • Making careful spending decisions • Saving and investing for the future • Having insurance • Keeping to a budget • Using credit wisely • Understanding contracts, warranties, and guarantees protect individuals

12. Raise your hand to answer the following questions.

13. What is the term for the way that financial capital moves through the economy?

14. What is the term for the way that financial capital moves through the economy? Circular Flow

15. What would be a good title for the following list. • Maintains the value of the dollar • Regulates banking • Manages the money supply • Acts as the nation’s bank

16. Roles of the Federal Reserve

17. What would be a good title for the following list? • Making careful spending decisions • Saving and investing for the future • Having insurance • Keeping to a budget • Using credit wisely • Understanding contracts

18. Financial Responsibility

19. Complete an A to Z Sheet about Banking and Finance