Section 2

Review

Vocabulary

1. Explain the significance of state bank, legal tender, national bank, national currency, gold certificate, silver certificate, central bank, bank run, bank holiday, fractional reserve system, legal reserves, reserve requirement, member bank reserve (MBR), and excess reserves.

Main Ideas

2. Describing How did experiences during and after the Revolutionary War affect banking in the United States?

3. Listing Use a graphic organizer like the one below to list the reasons for creating the Federal Reserve System.

Critical Thinking

4. â– inaiunr;^ why did the United States move to a single national currency in the 1860s?

5. Synthesizing How does the system of fractional reserves "create" money?

6. Making Comparisons How do the operations of a central bank like the Fed compare to the operations of a normal bank?

7. Analyzing Visuals Examine the photo on page 394. What weaknesses in the banking system led to the actions pictured in this photo?

Applying Economics

8. National and State Banks Interview the branch managers of different banks in your locality. Ask whether the bank is a national bank or a state bank and how that designation affects the bank's operation and relationship with the Fed.

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