1. DRAW A LINE SEPARATING TODAY & YESTERDAY 1) Write: Date: 02/09/11 , Topic: Money 2) Next line, write “ Opener #20 ” and then: 1) Write 1 high + 1 low in last 24 hours 2) Rate your understanding of yesterday: lost < 1-5 > too easy (3 is perfect) 3) Respond to the Opening Clip by writing at least 1 sentences about : Your opinions/thoughts OR/AND Questions sparked by the clip OR/AND Summary of the clip OR/AND Announcements: None

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

6. 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)

9. Island of Lap

11. 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

16. 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.

22. 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.

23. Notes #20a , 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.

24. 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

25. 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)

26. 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

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

28. g) Money Multiplier : Putting money in banks grows the money supply since most is lent out

29. 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)

30. Journ # , Title “ Video: ” 1) Copy Source Title: A 2…) Discuss questions on the board with a partner. Summarize your discussion ( include their name at the end ). Remember participation points are deducted if off task. 5 Reading/Film Qs Come From These Work Sections Time Bookmark: 44:12-44:52, 1:15:35-1:18:05

31. Homework: 1) Study today’s notes + work sections for a possible workbook quiz . 2) Study for Test 1 on Monday 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 )