The Mighty Dollar – How Does It Really Work?

It's nighttime and you are out with your friends. You all decide to go to dinner and a movie, but you don’t have any money on you. What do you do? You probably find the nearest ATM and get cash from your bank account. What if everyone decided to withdraw money from the bank at the same time? Would your bank run out of money? How does the bank ensure that it has enough money for you and your friends to take money from your accounts while keeping enough on hand to lend to other customers at the same time? Your bank provides services to you, but the Federal Reserve handles all of the services your bank needs in order to serve you.

Essential Question

• How does the Federal Reserve affect me, U.S. banks, and the economy?