Back to course 'ECON120: Monetary History'

Topic outline

  • Unit 4: The Federal Reserve System

    Collapse all Expand all

    This unit discusses the early evolution of the Federal Reserve System in the United States. It examines the precedents that led to the Federal Reserve, its early history, and the Bretton Woods agreement of 1944. It focuses on the difference between wholesale and retail money, which will be discussed later in the context of central bank digital currencies (CBDCs). It examines the layered money system of the Federal Reserve during its first few decades of existence. The history of the Great Depression and subsequent government and Federal Reserve action surrounding gold and the monetary hierarchy is examined. This era began delinking the monetary system from gold as its first layer. Finally, this unit details the Bretton Woods agreement and how that agreement shaped the money system today.

    Completing this unit should take you approximately 1 hour.

    • Upon successful completion of this unit, you will be able to:

      • summarize the American monetary system up until the creation of the Federal Reserve System;
      • differentiate between the Fed's wholesale money and retail money;
      • describe some purposes of the Federal Reserve and how they affect the monetary hierarchy in the United States;
      • describe the relationship between gold, US Treasuries, Fed reserves and notes, and commercial bank deposits by 1918; and
      • explain why and how the United States government reduced its reliance on gold during the Great Depression.

    • 4.1: Early American Money

      This subunit summarizes the American monetary situation before 1907, including the origin of the word "dollar". It discusses the monetary mix in the United States in the context of layered money.

      • page icon
        Early American Money Page
        Students must
        Mark as done

        Read this section about the American monetary situation before 1907.

    • 4.2: The Federal Reserve System

      This subunit introduces the Federal Reserve system. It discusses the Panic of 1907 and how it led to a United States central bank. It discusses the Federal Reserve Act and explains the purpose of the act. It introduces the difference between wholesale and retail money, which helps understand the evolution of the international monetary system and future central bank digital currencies (CBDCs). It also introduces the Federal Reserve's gold coverage ratio.

      • page icon
        The Federal Reserve System Page
        Students must
        Mark as done

        Read this section about the Federal Reserve system.

    • 4.3: The Evolution of the Federal Reserve

      In this subunit, we examine the evolution of the American monetary system under the Federal Reserve. We will explain how the Great Depression unleashed a series of events, including Executive Order 6102, the Gold Reserve Act, and the Federal Deposit Insurance Corporation that forever changed the monetary system.

      • page icon
        The Evolution of the Federal Reserve (1918-1944) Page
        Students must
        Mark as done

        Take note of the evolution of America's monetary system under the Federal Reserve and the influences of the Great Depression.

    • Unit 4 Review and Assessment

      • page icon
        Unit 4 Review Page
        Students must
        Mark as done

        This video walks through the major topics we covered in Unit 4.  As you watch, consider how the US dollar system changed over time.

      • quiz icon
        Unit 4 Assessment Quiz
        Students must
        Receive a grade

        Take this assessment to see how well you understood this unit.

        • This assessment does not count towards your grade. It is just for practice!
        • You will see the correct answers when you submit your answers. Use this to help you study for the final exam!
        • You can take this assessment as many times as you want, whenever you want.