Presentation on theme: "Money Ch 18. I. Functions and uses of Money A. Means of exchange 1. Money is accepted as an exchange for goods and services."— Presentation transcript:
Money Ch 18
I. Functions and uses of Money A. Means of exchange 1. Money is accepted as an exchange for goods and services.
B. Store of economic value 1. Money enables people to store some of their earnings and save for major purchases
a. Accepted places to store money: banks, savings and loans, credit unions, etc.
2. Use to run the economy
C. Standard of Value 1. Money is a convenient way of indicating the worth of different goods and services.
2. Value is placed on money; the more acquired more value is given 3. Must have money for a market economy
D. Barter System 1. Traditional System 2.Exchanging goods for other goods and services
3. Only works when all people involved agree on value of items
4. Money is not necessary
II. Forms of Money A. Currency – Legal Tender 1. Paper money and coins B. Checking Accounts 1. Not legal tender 2. Demand Deposits – most common type of checking acct
3. N.O.W. (Negotiated Order of Withdrawal) a. Acts like a checking account b. Balance in the account earns interest
c. Minimum balance is usually very high: $2,000 – $5,000
C. Savings Account 1. Earns depositor interest 2. Simple passbook accountearns interest on balance a. able to deposit money and withdraw at any time without penalty
3. Can not write checks 4. Special Savings Accounts: Timed Deposit Accounts
a. C.D. = Certificate of Deposit 1. Earns higher interest for longer periods of time 2. Example: 6 mo, 12 mo, 18mo, 2yrs, 5 yrs, etc
b. I.R.A. (Individual Retirement Account) 1. Tax free money saved by individuals, which earn high interest
2. Taxes are paid upon withdrawal usually after 55 or 60 yrs.
III. Near Money -acts like money but in reality they are loans 1. Credit Cards a. Credit cards are loans to the user from the credit card company.
b. Most companies, like MasterCard or Visa, do not charge fees for joining c. They earn their money on interest charged for all the unpaid balances.
2. Stocks, Bonds, Insurance Policies
IV. Federal Reserve Bank A. Background 1. Founded in 1913 during President Woodrow Wilsons Administration.
2. Known as the Bankers Bank a. Where the banks borrow money b. 12 Federal Banks (Districts) exist. 1. Most of them are on the east coast.
3. The Federal Banks distribute all money and coins from Bureau of Engraving and U.S. Mint. The United States Mint The United States MintThe United States Mint http://www.moneyfactory.com/ne wmoney/ http://www.moneyfactory.com/ne wmoney/
4. Banks are clearinghouse of all checks.
5. All National Banks are members of the Federal Reserve and insured by the federal government. (FDIC)= Federal Deposit Insurance Corporation