Advantage and Specialization
• Absolute Advantage
– better at production of given good or service
• Comparative Advantage
– Produces good or service at lower opp. cost
– Should specialize in production
At the base of the pyramid on the
$1 bill you will find “****” in
Roman Numerals
On the $100 bill, the clock tower
of Independence Hall in
Philadelphia is shown with the
time set at 4:10. According to the
US Bureau of Engraving and
Printing, “there are no records
explaining why that particular
time was chosen”
The elm tree on back of the $20
bill near the White House
represents a real tree in this
same location. However, the tree
is no longer on the White House
grounds because it succumbed
to rain-softened ground in 2006
Most people save $2 bills,
thinking they are rare and
therefore valuable; they're
actually worth... $2
97% of all paper money
contains traces of cocaine
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Top Yahoo News Searches of 2013
10- Food Host Fired
9- World Leader Death
8- New Pope (1st From Which Continent)
7- This Country Threatens Nuclear War
6- Syria- which chemical
5- Trial (name the man)
4- Baby- name the baby
3- Boston
2- This Law
1- Boyfriend murderer
What is Money?
• Anything generally accepted as payment
Types of Money
Commodity money- money itself serves a
purpose (i.e. tulip bulbs, salt, tobacco)
Backed-money- money’s value is backed by
a commodity (i.e. gold, silver)
Fiat money- value based solely on
acceptance of value and
government backing
Federal Reserve Act of 1913
• Created Federal Reserve System
12 District Banks
Where’s My Money From?
• Boston
New York
Philadelphia
Cleveland
Richmond
Atlanta
Chicago
St. Louis
Minneapolis
Kansas City
Dallas
San Francisco
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Ben Bernanke- FED Chairman
Janet Yellen- FED Chairman
The FED
Bank Panic- 1907
F.D.I.C.
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1934 – $2,500
1935 – $5,000
1950 – $10,000
1966 – $15,000
1969 – $20,000
1974 – $40,000
1980 – $100,000
2008 – $250,000
F.D.I.C.
• Federal Deposit Insurance Corporation
• Insures bank deposits up to $5,000 (then)
$100,000 (recent)
$250,000(now)
Monetary Policy
• Fiscal Policy
– Taxes and spending
– Controlled by politicians
• Monetary Policy
– Control of the money supply
– NOT controlled by politicians
Roles of the FED
• Government’s Bank
• Bank for Banks
• Monetary Policy- control money supply to
stabilize inflation and maximize employment
(keep prices from
rising too quickly)
(stimulate economic growth)
Monetary Policy
• During Recession- Increase Money Supply
• During Inflation- Decrease Money Supply
Tools of the FED
• Reserve Requirement
• Discount Rate
• Open Market Operations