Download 1930: The Federal Reserve during the Great Depression

1913: The Birth of the Federal Reserve system
Federal Reserve Act: The U.S. legislation that created the current Federal Reserve System. The Act was established to foster
economic stability through the introduction of a central bank.
Federal Reserve System: The central bank of the United States. It is responsible for controlling the money supply of our nation,
and includes serving as a bank for all other banks and a bank for the U.S. Government.
Central Bank: A bank that regulates the money supply for a nation and oversees the operations of other banks.
Board of Governors: The Federal Reserve’s governing and monetary policy-making body. This board consists of seven governors
appointed by the President to staggered 14-year teams.
1914-1918: The Federal Reserve during World War I
Treasury Department: The section of the federal government that manages the nation’s money.
Interest rate: The price paid for using someone else’s money, expressed as a percentage of the amount borrowed.
Liberty Bonds: Certificates of debt issued by the government during WWI. These bonds promised to repay money borrowed from
the lender at a fixed rate of interest and at a specific time.
1930: The Federal Reserve during the Great Depression
Depression: A severe, prolonged economic contraction (or recession), when there is no economic growth.
Economy: The wealth and resources of a country or region, with a focus on the production and consumption of goods and services.
1946-1952: The Federal Reserve after World War II
Monetary Policy: Changes in the supply of money and availability of credit through a nation’s central bank. These changes are
made to promote price stability, full employment and reasonable rates of economic growth.
Fiscal Policy: Decisions about spending and taxation levels by the federal government made to promote full employment and
output or to reduce inflation.
1970s: Inflation in the U.S.
Inflation: A rise in the general or average price level of all goods and services produced in an economy.
1980: The Monetary Control Act
Reserve Requirement: The fraction of a bank’s deposits that it is required by law to keep on hand or with the Federal Reserve.
Permission is granted to reprint or photocopy this lesson in its entirety for educational purposes,
provided the user credits the Federal Reserve Bank of Kansas City. www.kansascityfed.org/education
1990s: Economic Expansion
Economic Expansion: The increase in the level of economic activity and of the amount of goods and services available in the marketplace; economic growth.
2001: Federal Reserve responds to 9/11
Consumers: People who buy and/or use goods and services to satisfy their needs and wants.
2007-2010: Great Recession and Dodd-Frank Act
Recession: A decline in the rate of national economic activity for at least two consecutive quarters (six months).
Economic Growth: A percentage increase in real output as measured by real GDP (Gross Domestic Product).
Debt: Money owed to someone else.
Credit: Promise of payment at a future time in return for goods and services now.
Gross Domestic Product: The market value of all final goods and services produced in a country in a calendar year.
Investments: The amount of money invested in stocks, bonds, mutual funds and other investment instruments.
Permission is granted to reprint or photocopy this lesson in its entirety for educational purposes,
provided the user credits the Federal Reserve Bank of Kansas City. www.kansascityfed.org/education