Money and Banking

Section 1
 Money is anything that serves as a medium of
exchange, a unit of account and a store of
value
 1) Medium of exchange- anything that is
used to determine value during the exchange
of goods and services
 2) Unit of account- a means of comparing the
values of goods and services
 3) Store of value- something that keeps its
value if it is stored rather than used
 The coins and paper bills used as money in a
society are called currency.
 1) Durability- Objects used as money must
withstand wear and tear
 2) Probability- Easy to carry around and
transfer
 3) Divisibility- Easily divided into smaller
amounts
 4) Uniformity- all units of money must be
identical
 5) Limited Supply- Federal Reserve System
controls supply of money in circulation
 6) Acceptability- everyone in economy must
be able to exchange the objects that serve as
money for goods and services
Section 2
 In 1913,the Federal Reserve System Act
established the Federal Reserve System. The
Fed is the nations central bank that creates
national currency called Federal Reserve
Notes.
 After the Great Depression, the Federal
Deposit Insurance Corporation (FDIC) was
created to instill trust in banking system.
Today the FDIC insures customer deposits up
to 250,000 if a bank fails.
Section 3
 The money supply is all the money available
in the U.S. economy.
 Banks perform many functions and offer
many services to consumers
 1) Store money- its safe and convenient
 2) Credit Cards- cards entitling their holders
to buy goods and services based on the card
holders promise to pay
 3) Saving money- the most common options
are:
◦ Savings accounts
◦ Checking accounts
◦ Money Market Accounts
◦ Certificates of Deposits (CDs)
 4) Loans- Make loans to help new businesses
and help established businesses' grow
 5) Mortgages- a specific loan used to
purchase real estate
 Banks make money of interest rates they
receive from consumers who have taken
loans
 Interest is the price paid on the use of
borrowed money
 The rise of computers in banking as
increased dramatically
 Automated Teller Machines (ATM)- can
deposit, withdraw cash and obtain account
information
 Debit Cards- used to withdraw money from
checking account
 Automatic Clearing Houses (ACH)- transfer
funds from customers’ accounts into
creditors’ accounts
 Home Banking- can check balances or make
transfers from home computer
 Store Value Cards- have magnetic strips or
computer chips with account balance
information
 In 1 whole sheet of paper, draw your
INSIGHTS about advantages or disadvantages
of money.
 How do you save money?
 Is it important? Why?