1. Fri. 4/15

2. Ch. 10 Money and Banking 10.3 Notes “Banking Today”

3. Measuring the Money Supply M1 ( Liquidity ) Represents money that people can gain access to easily Used to pay for goods and services M2 (Near Money) Can not be used in direct financial exchanges All assets in M1 plus: Savings accounts Mutual Funds Money Market funds

4. Functions of Financial Institutions Storing Money Safe place to store cash Saving Money Savings Accounts Checking Accounts Money Market Accounts Higher variable interest rate Limited withdrawals Certificate of Deposits (CD) Higher fixed interest rate Locked in for specific time 3/5/7 years

5. Loans Fractional Reserve Banks Business, car,, home improvement Mortgages Home loan 15/20/30 years Credit Cards HSBC Simple Interest only on principal Compound Interest Interest on principal and accumulated interest 12 month no payments and interest

6. Types of Financial Institutions Commercial Banks State or National Regulated by FDIC B of A Savings and Loan Associations (S&L) Deposit money into savings accounts Specialized in mortgages ING Savings Banks Credit Unions Belong to selective members of society Teachers Federal Credit Union Finance Companies Installment loans to consumers for large purchases Best Buy Card

7. Electronic Banking Automated Teller Machines (ATM) Debit Cards Card pulls money out of checking account Automatic Clearing House (ACH) Pay bills electronically Ran by Federal Reserve Banks Stored Value Cards Gift cards