Module 6 Flashcards
Article 1 section 8
The congress has the power to coin money, regulate the value thereof, and of foreign coin
Punishment of counterfeiting
3 functions of money
1) medium of exchange
2) store of value
3) unit of account
Commodity money
Made from something of value
Tobacco leaves, gold, silver
Bimetallic monetary system
Alexander Hamilton Created this system (both good and silver were legal money)
The crime of 1873
Abandonment of silver and switched officially to just gold as money
Stopped the domestic gold standard in 1934
Woodrow Wilson
Stopped using gold internationally in 1972
Richard Nixon
Most used coin in the US from mid 1700s to 1850
Spanish Silver Dollar
Fiat
By order
How does money affect the economy
Prices, interest rates, real gdp
The __________ determines interest rates
Money supply
Central banks functions
1) clear electronic payments and checks
2) bankers bank
3) regulates banks
4) control money and interest rates
5) lenders of last resort
When was fed founded?
1913
The feds board of governors has ___ people with ____ year terms
7
14
The fed has ___ districts
12
Each fed district has a president and a __ person board of governors.
9
3 bankers, 3 business people, 3 non-banking public
Is the entity of the fed responsible for controlling the money supply and interest rates.
Federal Open Market Committee
The Federal Open Market Committee is composed of
7 members of board of governors
5 of bank presidents
The federal reserve controls the money supply by buying and selling bonds?
True
Discount Rate
Rate at which banks borrow from the fed
Federal funds rate
Rate at which the banks borrow from each other
Article 1 section 10
No state shall coin money, emit bills of credit, make anything but gold and silver coin a tender in payments of debt
How did McCulloch vs Maryland 1819 start
Congress puts a branch of The Bank of United States in Maryland and Maryland rejects this bank so they put a steep tax on this bank.
McCulloch vs Maryland 1819
1) congress has the power to create a corporation
2) has the power to create a bank -“all laws necessary and proper”
The constitution contains implied powers
The state of Maryland can’t tax the federal government
Outcome of McCulloch vs Maryland
Banks can print their own money
Andrew Jackson refuses to renew the charter of the Second Bank of the United States
Created Federal Banks and only they can print money (to raise money to fight the civil war) (1863)
Federal Banks required to buy Federal Bonds
Banks can switch from being chartered from state to bank being chartered by federal government
Samuel Chase
1869 Hepburn vs Griswold
After Us issues paper money not redeemable in 1863
Congress may issue bonds but may not make paper money legal tender. Only gold and silver
In 1871, republicans voted for congress to be able to issue paper money not redeemable in order to deal with national emergencies
True
Gresham’s Law
If there’s counterfeit money and good money, people will hold the good money and spend the counterfeit money. So must protect nations currency from counterfeiting.
