Data Bases • Custom Term Papers • Free Term Papers • Free Research Papers • Free Essays • Free Book Reports • Plagiarism? Links • Top 100 Term Paper Sites • Top 25 Essay Sites • Top 50 Essay Sites • Search 97,000 Papers @ DirectEssays.com • Search 101,000 Papers @ ExampleEssays.com • Search 90,000 Papers @ MegaEssays.com Free Essays • Term Paper Sites • Chuck III's Free Essays • Free College Essays • TermPaperSites.com • Free Essays • My Term Papers • Essay World • Planet Papers	Search Lots of Essays Back to Subjects - Government & Politics economics economics Money, the Federal Reserve System, and Banking You have used money to measure the price, the size of business, total output in the economy, and income. Coins and paper money are called currency. People use currency daily. When you go to a movie, you probably buy a ticket with currency. Coins and paper money work well for small purchases and when payment is made directly from one person to another. But, for large purchases or when payments travels to mail, currency is not practical. A check is a written order to pay money from amounts deposited. Therefore, deposits in checking accounts, credit union share draft accounts, and other similar accounts are considered money. Remember that the most important function of money is as a medium of exchange. Therefore, one reason we demand money is to make exchanges. We can trade our labor for money and then trade the money for what we want to buy. This means that we have a transaction demand for money. The transaction demand for money is the demand for money to make exchanges. We need money to make economic transaction. We want to be paid in money, and we want to use money to buy goods and services. The main factor that affects the transaction demand for money is the level of income in the economy. The higher the level of income, the greater the demand for money and buying power, The asset demand for money is the demand for money in order to hold wealth in the form of money. Some people will always hold some part of their wealth in the form of money. If we use money to buy an asset that pays interest, such as a government or corporate bond, we earn more money in the form of interest payments. The Federal Reserve System is the central banking system in the United States. The United States was slow to adopt a central banking system. Not until 1913 did Congress, under pressure from President Wilson, pass the Federal Reserve Act of 1913. Each Federal Reserve Bank operates as a private business with its own president and board of directors. The board of directors has nine members, six of whom are elected by member banks. Member banks are those that belong to the Federal Reserve System. The other directors are appointed by the Board of Governors of the Federal Reserve System. Ten of the Federal Reserve Banks have branches that are closely controlled by the district banks. A Board of Governors supervises the Federal Reserve System. The Seven members of the Board of Governors are appointed by the president with the approval of Congress. The Federal Open Market Committee acts on one important part of monetary policy: the buying and selling of U.S. government securities by the Federal Reserve Banks. The Federal Advisory Council consist of 12 members who meet four times each year with the Board of Governors to discuss the economic situation and policies of the Board. A commercial bank is a type of financial institution that was originally formed to serve businesses but now provides a large number of financial services to both business customers and individuals. A demand deposit is money that must be paid upon demand by the holder of a check. A share draft account is an account with a credit union from which withdrawals easily can be made through a draft. An important feature of the U.S. system is the role played by the Federal Deposits Insurance Corporation the agency that insures deposits of individuals and businesses for up to $100,000 in the event of a bank failure. A financial intermediary is an organization that helps the flow of money from people with money save to people who needs to borrow money. A savings and loan association is a financial intermediary that mainly provides a place for people to save money and then lends that money to people to buy houses or other items. Mutual savings banks are the banks that were first formed for the same reasons as saving and loan associations and that promote thrift in their members. Bibliography: Word Count: 685
Copyright © 1998-2008 College Term Papers, INC All Rights Reserved. DMCA Notifications and Requests