Money In The U.S. Economy

The quantity of money in an economy is central to determining the state of that economy -- it affects the level of prices, the rate of economic growth and the level of employment. It is a medium of exchange that people will accept for their goods or services and a unit of account for prices or debts. In addition, it can be used like property or precious metals -- as a store of wealth that people can save for future purchases.

Money in the United States consists of coins and paper currency. According to federal law, only the U.S. Treasury and the Federal Reserve System can issue U.S. currency. The Treasury issues all coins, while the Federal Reserve and the Treasury each issue a type of paper money -- Federal Reserve notes and United States notes, respectively. All U.S. currency carries the nation's official motto, "In God We Trust."

Coins come in various denominations based on the value of a dollar: the penny, one cent or one-hundredth of a dollar; the nickel, five cents or five-hundredths of a dollar; the dime, 10 cents or ten-hundredths of a dollar; the quarter, 25 cents or one-fourth of a dollar; the 50-cent piece or half-dollar; and the one-dollar coin.

Paper money issued in the United States consists almost entirely of Federal Reserve notes, which are issued by the 12 Federal Reserve Banks in the Federal Reserve System. These notes come in denominations of $1, $2, $5, $10, $20, $50, and $100. Until 1969 the Federal Reserve Banks also issued $500, $1,000, $5,000, and $10,000 notes.

The U.S. Treasury issues the only other paper money in the United States today, and these notes are issued only in $100 denominations. Both United States notes and Federal Reserve notes carry the printed signatures of the secretary of the treasury and the treasurer of the United States.