5/7 Warm-Up5/7 Warm-Up

Pass up p. 266 for me to check.Pass up p. 266 for me to check.

1.1. What are the two ways a stockholder can make What are the two ways a stockholder can make money?money?

2.2. What are the two most important measures of the What are the two most important measures of the stock market?stock market?

Bonus ?Bonus ?

Secretary of State Kerry is meeting with which foreign Secretary of State Kerry is meeting with which foreign leader today to discuss the conflict in Syria?leader today to discuss the conflict in Syria?

HonorsHonors

What’s wrong with this sentence?What’s wrong with this sentence?

““Self-interest because it talks about how Self-interest because it talks about how we only care about ourselves.”we only care about ourselves.”

Citizenship ProjectCitizenship Project

Remember all pre-approvals are due by Remember all pre-approvals are due by Friday!Friday!

LaborLaborp. 266p. 266

ProductivityProductivity – the – the valuevalue of of outputoutput

Types of LaborTypes of Labor Unskilled laborUnskilled labor – requires – requires no specializedno specialized skills, education or skills, education or

trainingtraining Ex. dishwashers, many factory workers, janitors, farm Ex. dishwashers, many factory workers, janitors, farm

workersworkers Semi-skilledSemi-skilled labor labor – requires – requires minimal specializedminimal specialized skill and skill and

educationeducation Ex. short order cooks, some construction workers, Ex. short order cooks, some construction workers,

lifeguardslifeguards SkilledSkilled labor labor – requires – requires specializedspecialized abilities and training to do abilities and training to do

tasks.tasks. Ex. mechanics, bank tellers, plumbers, firefighters, Ex. mechanics, bank tellers, plumbers, firefighters,

chefs, carpenterschefs, carpenters ProfessionalProfessional labor labor – demands advanced skills and education. – demands advanced skills and education.

Ex. managers, teachers, bankers, doctors, lawyers, Ex. managers, teachers, bankers, doctors, lawyers, actors, computer programmersactors, computer programmers

Wage DiscriminationWage Discrimination

Occurs when people with the same job, Occurs when people with the same job, same skills and education, same job same skills and education, same job performance, and same seniority receive performance, and same seniority receive unequal pay. Women and minorities are unequal pay. Women and minorities are among those who have experienced among those who have experienced wage discrimination. wage discrimination.

Ways to Protect WorkersWays to Protect Workers Labor UnionsLabor Unions – an organization – an organization

that tries to that tries to improveimprove working working conditions, wagesconditions, wages, and , and benefitsbenefits for its membersfor its members

StrikeStrike – organized work stoppage – organized work stoppage intended to force an employer to intended to force an employer to address union demandsaddress union demands

Ways to Protect WorkersWays to Protect Workers

Right-to-work lawsRight-to-work laws – this is a measure – this is a measure that that bans mandatory union bans mandatory union membershipmembership. NC is a right-to work state. . NC is a right-to work state.

What Does Right-to-Work Mean?

Collective bargainingCollective bargaining – the union and – the union and company representatives meet to company representatives meet to negotiate a new labor contractnegotiate a new labor contract

Right to Work StatesRight to Work States

To avoid a strike,To avoid a strike,

a third party may be called in to settle a a third party may be called in to settle a dispute:dispute: MediationMediation – neutral mediator meets with – neutral mediator meets with

each side to try to find some solution. each side to try to find some solution. Decision reached by the mediator is Decision reached by the mediator is nonbinding. nonbinding.

ArbitrationArbitration – a neutral third party – a neutral third party reviews the case and imposes a decision reviews the case and imposes a decision that is legally binding for both sides. that is legally binding for both sides.

Money p. 269Money p. 269

Money Money p.269 p.269

What is money?

As an economy becomes more As an economy becomes more specializedspecialized, people give up , people give up barteringbartering (exchanging goods and services for other (exchanging goods and services for other goods and services) for goods and services) for moneymoney. . BarteringBartering is most commonly used in is most commonly used in traditionaltraditional economies. economies.

Three Uses Of MoneyThree Uses Of Money

Medium of ExchangeMedium of Exchange-- moneymoney determines value during the exchange of determines value during the exchange of goods and servicesgoods and services

Unit of AccountUnit of Account-- money provides a money provides a means for comparing the values of goods means for comparing the values of goods and servicesand services

Store of ValueStore of Value-- money keeps its value if money keeps its value if stored rather than usedstored rather than used

Six Characteristics of Six Characteristics of MoneyMoney DurabilityDurability- must withstand wear and tear that comes - must withstand wear and tear that comes

with being used over and over. with being used over and over. (We have (We have coinscoins and and paper moneypaper money..))

PortabilityPortability- - must be easy to transport and exchangemust be easy to transport and exchange DivisibilityDivisibility- must be easily divided into smaller - must be easily divided into smaller

denominationsdenominations UniformityUniformity- people must be able to count and - people must be able to count and

measure money accuratelymeasure money accurately Limited SupplyLimited Supply-- supply must be scarce supply must be scarce AcceptabilityAcceptability- people must be able to exchange - people must be able to exchange

money for goods and servicesmoney for goods and services

Money’s ValueMoney’s Value

Representative ValueRepresentative Value-- Our money has value Our money has value because it can be exchanged for something because it can be exchanged for something else of value. It does not have value in and of else of value. It does not have value in and of itself (if it did have a value in and of itself, it itself (if it did have a value in and of itself, it would be called would be called commodity moneycommodity money). In ). In America, money used to be “backed” by gold America, money used to be “backed” by gold or silver, but this went out in the 1930s.or silver, but this went out in the 1930s.

Fiat MoneyFiat Money ( (also calledalso called Legal Tender) Legal Tender)- our - our money is valuable because our government money is valuable because our government says it is valuable. says it is valuable.

The New $100 BillThe New $100 Bill

High Tech Hundred Dolar Bill

Making the $100 bill

How Money is MadeHow Money is Made

How Money is Made- How Stuff Works

Anti-counterfeiting measuresAnti-counterfeiting measures

Australian Plastic MoneyAustralian Plastic Money

How Money is MadeHow Money is Made

How coins are made…videoHow coins are made…video

How Money is Made- Modern Marvels pt. 1How Money is Made- Modern Marvels pt. 1

How Money is Made- Modern Marvels, pt. 2How Money is Made- Modern Marvels, pt. 2

Banking p. 270Banking p. 270

Money and BanksMoney and Banks

Bank:Bank:

an institution for an institution for receiving, keepingreceiving, keeping, and , and lendinglending money money

Early Banking in the USEarly Banking in the US

Very Very informal informal bankingbanking A merchant would allow customers to A merchant would allow customers to

depositdeposit money and charge a small money and charge a small feefee But this was not always But this was not always safesafe… what if … what if

the merchant goes out of business or is the merchant goes out of business or is not not trustworthytrustworthy??

Two views of Banking….Two views of Banking….

FederalistsFederalists (Alexander Hamilton) (Alexander Hamilton) CentralizedCentralized banking was necessary banking was necessary HamiltonHamilton proposed a national bank proposed a national bank

issue a issue a singlesingle currency currency monitor other banks throughout the monitor other banks throughout the

countrycountry manage the manage the federal government’sfederal government’s funds funds

Two Views of Banking…Two Views of Banking…

Anti-FederalistsAnti-Federalists (Thomas (Thomas Jefferson)Jefferson) DecentralizedDecentralized banking system banking system Banks should be created and Banks should be created and

operated by the operated by the statesstates

Functions Of BanksFunctions Of Banks Storing MoneyStoring Money-- banks provide a banks provide a

safe, convenient, insured place to safe, convenient, insured place to store moneystore money Federal Federal DepositDeposit Insurance Insurance

CorporationCorporation (FDIC) (FDIC)- created in - created in 19331933 to insure customer deposits to insure customer deposits if a bank if a bank failsfails (up to $250,000 per (up to $250,000 per account)account)

Functions of BanksFunctions of Banks

Saving MoneySaving Money-- banks provide 4 ways to save money banks provide 4 ways to save money savingsaving accounts accounts checkingchecking accounts accounts money marketmoney market accounts – money lent to the bank accounts – money lent to the bank

for a short periodfor a short period certificatescertificates of deposit (CDs) – money lent to the of deposit (CDs) – money lent to the

bank for a longer period of time. bank for a longer period of time. (money held in a checking account is a (money held in a checking account is a demanddemand

depositdeposit, because checks are paid “on demand”; , because checks are paid “on demand”; CDs are CDs are time time depositsdeposits, because the money , because the money cannot be withdrawn immediately without cannot be withdrawn immediately without penaltypenalty))

Functions of Banks Functions of Banks (continued)(continued)

Loaning MoneyLoaning Money-- banks provide banks provide loansloans, and , and make money by charging the borrower make money by charging the borrower interestinterest Banks use Banks use fractionalfractional reserve banking reserve banking- -

meaning that banks only keep a fraction of meaning that banks only keep a fraction of funds on hand and lend the remainder. The funds on hand and lend the remainder. The Federal Reserve establishes the Federal Reserve establishes the required required reservereserve ratio ratio, or the fraction of deposits that , or the fraction of deposits that must be held in reserve.must be held in reserve.

It's a Wonderful Life- Your Money's Not HereIt's a Wonderful Life- Your Money's Not Here

It's a Wonderful Life- Bank Run It's a Wonderful Life- Bank Run (7 min- longer clip)(7 min- longer clip)

Functions of Banks Functions of Banks (continued)(continued)

Credit CardsCredit Cards-- banks issue credit cards (a banks issue credit cards (a card entitling its holder to buy goods and card entitling its holder to buy goods and services based on the holder’s promise to services based on the holder’s promise to pay pay laterlater), and make money by charging ), and make money by charging interestinterest

CollateralCollateral- property- property used to secure a used to secure a loanloan. . Lenders require collateral to ensure they will Lenders require collateral to ensure they will not not loselose money on defaulted loans. money on defaulted loans.

Types of Financial Types of Financial InstitutionsInstitutions

Commercial BanksCommercial Banks-- offer checking services, offer checking services, accept deposits, and make loansaccept deposits, and make loans

Savings and LoansSavings and Loans-- originally created when originally created when members deposited funds into a members deposited funds into a generalgeneral fund and fund and then then borrowedborrowed money to buy their own homes; money to buy their own homes; now serves many of the same functions of a banknow serves many of the same functions of a bank

Credit UnionsCredit Unions-- cooperative lending cooperative lending associations for particular groups (i.e. associations for particular groups (i.e. state employees), usually state employees), usually smallsmall, , specialize in home mortgages and car specialize in home mortgages and car loansloans, some provide checking/saving, some provide checking/saving

HomeworkHomework

24.2, 24.3, pp. 267-824.2, 24.3, pp. 267-8