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The Federal Reserve System
 

The Federal Reserve System

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    The Federal Reserve System The Federal Reserve System Presentation Transcript

    • The Federal Reserve System Objective: What: To study the Federal Reserve System and how it influences the economy How: By guided note taking through a PowerPoint presentation
    • How the Federal Reserve is set up
      • The Fed is made up of about 6,000 banks across the U.S.
      • The Fed is run by seven individuals called the board of governors
      • Each member is appointed by the President
      The board as of 2008
    • How the Federal Reserve is set up
      • The Fed is divided into 12 districts across the U.S.
      • Each district has 1 Federal Reserve Bank
      • The main office of the Fed is in Washington D.C.
    • What does the Fed do?
      • The Fed makes sure that member banks do business according to certain rules
      • Clearing checks is one service of the Fed
      • The Fed also lends money to member banks
    • What if the bank fails?
      • Each bank that is a member of the Federal Reserve System must also be a member of the Federal Deposit Insurance Corporation (FDIC)
      • The Fed and FDIC will work together to make sure your money is protected
    • Controlling the Money Supply
      • The main job of the Fed is to control the money supply in the U.S.
      • The fed uses two main tools for this
      • Reserve Requirement
      • Discount Rate
    • Reserve Requirement
      • Is the amount of money the Fed tells banks they must keep back from using
      • It can be as much as 22 percent of the money people have put in the bank
      • The higher the number the less money banks have to loan
    • Discount Rate
      • This is the amount of interest the Fed charges to loan money to banks
      • The higher the rate the less money banks want to borrow
    • Tight or Easy money
      • When the Fed wants to encourage people to spend more it increases the money supply, this is called easy money
      • When the Fed wants to slow down the economy is reduces the money supply, this is called tight money