1. Federal ReserveAnd other contributors to the U.S. Economy.

2. Terms to Know
Discount Interest Rate - Used to determine the present value of
future or past cash flows.

3. Terms to Know
Circulation - Refers to the total value of currency that is engaged in
that currency's economy at a given time

4. Terms to Know
E-Commerce - Commercial transactions conducted electronically on
the Internet

5. What is the Federal Reserve?
It is the Central Bank of the United States that regulates the
money supply in the US economy.

6. What does the Federal Reserve do?
It raises and lowers the discount interest rate and puts money
into and out of circulation.

7. Impact of the Federal Reserve
If the Federal Reserve raises the discount rate
– Consumer credit becomes more expensive
– Consumers buy fewer large goods—refrigerators, boats, etc.

8. Impact of the Federal Reserve
If the Federal reserve lowers the discount rate
– Consumer credit becomes less expensive
– Consumers buy more expensive goods—cars, washing machines, etc.

9. What are Stocks?

10. What are Stocks?
• Stocks are shares of ownership in corporations
• Shareholders have partial ownership in the
corporation
• Corporations are permitted to sell stock to raise
capital for the corporation
• Shareholders may receive dividend payments from
the corporation

11. What else is traded?

12. What else is traded?
Bonds—loans made by the investor to the issuer; the investor is repaid
with interest
– Corporate Bonds
– Municipal Bonds
– Treasury Bonds
– US Savings Bonds

13. What else is traded?
Futures—agreement to buy or sell a commodity (oil, gold, etc.) at some
point

14. What else is traded?
Mutual Funds —combination of individual stocks

15. Stocks, Bonds, Futures,
and Mutual Funds are called
Securities.

16. Purpose of the
Stock Exchange

17. The stock market is where shares of stocks,
bonds, and futures are bought and sold (or
traded). This can be electronically done.
Purpose of the Stock Exchange

18. The stock exchange is the actual physical
location where stocks are listed and traded.
New York Stock Exchange (NYSE)
American Stock Exchange
NASDAQ—virtual exchange
Purpose of the Stock Exchange

19. Provides companies with a way and a place for issuing shares of
stock to people who want to invest in the company. The sale of
shares of stock is a way for the corporations to raise money.
Function of the Stock Market

20. Bull Market

21. Bull MarketStock prices going up or rising.
Consumers are optimistic and buy stock
hoping to earn more money.
Consumers buy goods and businesses
prosper.

22. Bear Market

23. Bear MarketStock prices are going down or falling.
Consumers are pessimistic and reluctant to buy
stock.
Investors sell stock so they won’t lose more
money
Consumers buy fewer goods and businesses may
lose money. Some workers may lose jobs.

24. E-Commerce
Impact on the Economy

25. E-Commerce
Impact on the Economy
Because consumers can purchase goods on the Internet they have more choices in goods.
Global competition is increased and US businesses must compete globally.
Fewer salespeople are needed in stores—a shift in jobs is required. More people are needed
in order fulfillment and customer service.
Goods are manufactured just-in-time—as they are needed for distribution.