In one page, create a concept map in a Word document showing the relationship between money, banking, and the function and role of the Federal Reserve System from the following notes:
Money: – no money? Need to barter. – Double coincidence of wants: the unlikely occurrence that two people each have a good the other wants. – Need time to find a trading partner. – Money makes transactions easier and more convenient.
Banking: – Fractional reserve banking system: keep a fraction of deposits as reserves, use the rest to make loans – Reserve requirement (reserve ratio R): percent of deposits held as reserves. – Reserves: required (RR) – amount hold, excess (ER) – amount available for lending.
Bank run or Bank Panic: – Federal Deposit Insurance Corporation (FDIC): guarantees deposits. – Bank holiday: in 2007, Northern Rock Bank in U.K. taken over by the British government. – Federal Reserve: Lender of last resort Federal Reserve System: – Central bank: an institution that oversees the banking system and controls the money supply.
Federal Reserve (Fed): The central bank of the US. – Monetary policy: Federal policies to control the money supply.
Note: – I have attached an example picture of how the concept map should resemble exactly and not in any other way please!
Very Important Note: The federal reserve system can be presented in many different ways and connect with money and banking at the same time. Therefore, I have attached a word document for reading to help you explore more on this part and create a very well done concept map.
