1. Good Day! DRAW A LINE SEPARATING TODAY & YESTERDAY 1) Write: Date: 01/28/10 , Topic: Money 2) On the next line, write “ Opener #13 ” and then: 1) Plot your mood, reflect in 1 sent . 2) Respond to the opener by writing at least 2 sentences about : Your opinions/thoughts OR/AND Questions sparked by the clip OR/AND Summary of the clip OR/AND Other things going on in the news. Announcements: None Intro Music: Untitled

3. Agenda 1) Money End Goal, you will be able to… 1) What is money? Reminder 1) Study for Test 1 on Friday

4. Review 1) Price Floor : Gov passes law that bans any price below a set point (minimum wage, farm products)

5. 2) Price Ceiling : Gov passes law that bans any price above a set price (rent control)

8. Role of Money : A measurable unit of stored value for exchanging goods ( be anything ) Desired Qualities (but necessary): a) Portable (easy to carry) b) Durable (last a while) c) Divisible (breakable into smaller #) d) Limited (not plentiful or easily copied)

11. Island of Lap

13. How to create your own money? 1) First tie your new money to something existing valuable like gold (or even to existing money that already has value). Tie : Means ppl can exchange with the gov the new money for the existing good/other money . 2) Let people build trust + a sense of value in the new money . 3) Gov passes a law that says the new money can’t be swapped for anything from the gov anymore + hope ppl still trust the “fiat” money

18. History of US Dollar : a) Before 1860s , state + local banks printed own money tied to metals b) After 1860s , US/Fed gov printed money tied to gold + some silver. c) Gold Standard : Money can be swapped for fixed amount of gold d) 1934 , Gov stops allowing domestic swap of dollars for gold/silver. e) 1971 , Gov stops allowing foreign nations swap dollars for gold/silver. f) Fiat Money : Money is to be accepts by order of the govt. US has had fiat money since 1971.

24. So today, you can take your money and buy gold/silver at a store at market prices. You can’t take money to the US Treasury and demand gold/silver from them.

25. Notes #13a , Title: “ Money Notes ” 1) Fiat (by gov order) Money : Unlike gold backed money, US dollars must be accepted because the gov says so. 2) Floating Value : Value of money however is based on supply + demand.

26. 3) Inflation : Increase in the prices of most goods. Causes of Inflation: a) Free up lending ( Banks + Federal Reserve/Fed ) b) Expand money: Congress sells bonds (IOU) , which investors buy ( Fed buy from investors ) c) Rising production input cost (like wages + oil) 4) Consumer Price Index (CPI) : Gov measures commonly bought items to measure inflation.

27. Happy with Inflation : a) Debtors debt smaller, since debt is worth less b) Employers can give hidden pay cuts by not giving raises Unhappy with Inflation : a) Savings wasted (old hurt most) b) Interest rates to borrow money rise higher ( banks want to make sure they make profits so raise % they charge to borrow ) c) Business planning becomes difficult ( no idea how much future will cost ) d) Wages don’t usually inflate as fast as prices (workers hurt most)

28. 5) Investing : With inflation, money not invested loses spending power . a) Principal : Your initial amount of money b) Interest : % of principal added to principal c) Real Interest : % minus inflation d) Compounding Interest : % on top of principal + past interest e) Rule of 72 : Divide 72 by % to find how long to 2x

29. f) Determining Rates : Risk + Time + Amount increase Rates

30. 5) Saving Rate/Interest Rate : Banks give interest to attract money, loan that money, charge interests, skip off the difference for profit. So saving rates and lending rates are connected (of course lending rates are higher than saving)

31. Homework: 1) Study today’s notes + work sections for a possible workbook quiz . 2) Study for Test 1 on Friday Workbook Check: If your name is called, drop off your workbook with Mr. Chiang ( if requested, points lost if your workbook is not turned in )