2. TheThe
EconomyEconomy
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Ÿ __ __ __ __ __ __ __ __ __ __ ____ __ __ __ __ __ __ __ __ __ __
Ÿ __ __ __ __ ____ __ __ __ __
Word BankWord Bank
bank accountbank account
banksbanks
interest ratesinterest rates
loansloans
moneymoney
currencycurrency
Federal ReserveFederal Reserve
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kk
aa
yy
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mm
tt
oo
vv
o n e yo n e y
F e d e r a lF e d e r a l R e s e r eR e s e r e
c u r e n c yc u r e n c yl o n sl o n s
b a n kb a n k c c o u n tc c o u n t
l a n sl a n s
b a n sb a n s
m o n em o n e
i n t e r e s ti n t e r e s t r a e sr a e s
3. Click the coins to take a virtualClick the coins to take a virtual
tour of the U.S. Mint:tour of the U.S. Mint:
Do they make $10,000 bills? ClickDo they make $10,000 bills? Click
Ben Franklin to find out:Ben Franklin to find out:
A “note” is an I.O.U. Paper money inA “note” is an I.O.U. Paper money in
the U.S. is referred to as Federalthe U.S. is referred to as Federal
Reserve Notes. That means the FedReserve Notes. That means the Fed
owes you $1 in exchange for this bill.owes you $1 in exchange for this bill.
4. If you kept going,If you kept going,
you’d find out thatyou’d find out that
Mary’s $100 will addMary’s $100 will add
$1,000 to the money$1,000 to the money
supply.supply.
5. Click to watch a video about the FederalClick to watch a video about the Federal
Reserve:Reserve:
6. Click the calculator to access theClick the calculator to access the
inflation calculator at the U.S.inflation calculator at the U.S.
Bureau of Labor Statistics:Bureau of Labor Statistics:
When I was a kid,When I was a kid,
candy bars cost 5candy bars cost 5
cents!cents!
Ever heard anyone sayEver heard anyone say
something like this?something like this?
Inflation makes prices goInflation makes prices go
up over time.up over time.
Think about somethingThink about something
you bought recently. Howyou bought recently. How
much did you pay? Howmuch did you pay? How
much might it have costmuch might it have cost
years ago?years ago?
7. Click to view Hands On Banking’sClick to view Hands On Banking’s
tutorial about credit:tutorial about credit:
Click forClick for
FinancialFinancial
LiteracyLiteracy
VideosVideos
8.
9. 1) Can you exchange money1) Can you exchange money
for goods and services?for goods and services?
YesYes
NoNo
Money is the “medium of exchange” that people use toMoney is the “medium of exchange” that people use to
pay for things.pay for things.
10. 2) Does “money” ONLY2) Does “money” ONLY
refer to currency?refer to currency?
YesYes
NoNo
Money includes currency and bank account balances,Money includes currency and bank account balances,
which can be turned into currency.which can be turned into currency.
11. 3) Can you make unlimited3) Can you make unlimited
withdrawals from a savingswithdrawals from a savings
account?account?
YesYes
NoNo
Federal law limits the number of certain kinds ofFederal law limits the number of certain kinds of
withdrawals you can make each month.withdrawals you can make each month.
12. 4) Is it safe to keep your4) Is it safe to keep your
money in the bank?money in the bank?
YesYes
NoNo
The federal government insures bank deposits up to aThe federal government insures bank deposits up to a
certain amount of money.certain amount of money.
13. 5) Do banks pay people5) Do banks pay people
more for savings accountsmore for savings accounts
than they charge for loans?than they charge for loans?
YesYes
NoNo
Savings accounts pay a TINY amount of interest. InterestSavings accounts pay a TINY amount of interest. Interest
you pay on loans is much higher.you pay on loans is much higher.
14. 6) Could most people start a6) Could most people start a
business without a loan?business without a loan?
YesYes
NoNo
Starting a business can be expensive. Loans provideStarting a business can be expensive. Loans provide
money for equipment and startup costs.money for equipment and startup costs.
15. 7) Does lending make more7) Does lending make more
money available to spend?money available to spend?
YesYes
NoNo
Lending actually multiplies the amount of money out inLending actually multiplies the amount of money out in
the community.the community.
16. 8) Are banks required to8) Are banks required to
keep some money inkeep some money in
reserve?reserve?
YesYes
NoNo
Banks must keep a certain percent of deposits in reserve.Banks must keep a certain percent of deposits in reserve.
17. 9) Does anyone supervise9) Does anyone supervise
the banking industry?the banking industry?
YesYes
NoNo
The Federal Reserve and other federal agenciesThe Federal Reserve and other federal agencies
supervise the banking industry.supervise the banking industry.
18. 10) Does the Fed want the10) Does the Fed want the
economy to swing wildly upeconomy to swing wildly up
and down?and down?
YesYes
NoNo
The Fed’s goal is to keep the economy in balance.The Fed’s goal is to keep the economy in balance.
19. 11) Does increased lending11) Does increased lending
make the economy slowmake the economy slow
down?down?
YesYes
NoNo
Increased lending = more spending, which helps fire upIncreased lending = more spending, which helps fire up
the economy.the economy.
20. 12) Do some loans help you12) Do some loans help you
increase your ability toincrease your ability to
produce?produce?
YesYes
NoNo
A loan to start or expand a business, or a loan to get anA loan to start or expand a business, or a loan to get an
education, can help you earn more.education, can help you earn more.
21. 13) Is an entrepreneur likely13) Is an entrepreneur likely
to start his or her ownto start his or her own
business?business?
YesYes
NoNo
““Entrepreneurs” take risks to start new businesses.Entrepreneurs” take risks to start new businesses.
22. 14) Does paying for14) Does paying for
something with a loan costsomething with a loan cost
less than paying for itless than paying for it
outright?outright?
YesYes
NoNo
Paying with a loan always costs MORE than paying forPaying with a loan always costs MORE than paying for
something outright!something outright!
23. 15) Does anyone keep track15) Does anyone keep track
of your credit history?of your credit history?
YesYes
NoNo
Lenders report your credit history to the three creditLenders report your credit history to the three credit
reporting bureaus.reporting bureaus.
