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Published byJulius Savary Modified over 8 years ago
Money and Financial Institutions
In the monetary system goods and services are indirectly exchanged using money, which can then be exchanged for other goods and services. Money can be anything that people accept as standard for payment.
1. Medium of exchange – money changes hands. 2. 2. Standard of value –means for measuring the value of goods and services. 3. Store of value – holds its value over time and can be stored or saved.
1. Scarce 2. Accepted 3. Divisible 4. Portable and durable
The banking system is the main type of financial institution, or organization for managing money, in our economy. 3 main functions of a bank: 1. Storing Money 2. Transferring Money 3. Lending Money
A bank account is a record of how much money a customer has put in to or taken out of a bank. The money put in a bank is called a deposit, and the money taken out is called a withdrawal. Interest = money banks pay to depositors for use of their funds, or cost of the loan There are two main types of accounts: Checking accounts Savings accounts
Every single business transaction involves the transfer of money. Today more banks are using electronic funds transfer (EFT ) to move money around. With EFT, money is transferred from one account to another through a network of computers.
The money you deposit in a bank makes it possible for the bank to lend money to other customers. Collateral is something valuable you put up for a loan, such as a car or a coin collection, so that the bank can take it if you fail to pay back the loan. There are 4 main types of loans banks offer to businesses and individuals: 1. Mortgage loan (house would be your collateral) 2. Commercial loan 3. Individual loan 4. Line of credit
Safety-deposit boxes - store valuable items, such as jewelry and certificates Offer credit cards such as MasterCard or Visa. Manage trust funds
1. Commercial Banks 2. Savings and Loan Associations 3. Credit Unions
The Federal Reserve System (or Fed) is the central banking organization in the US Functions of the Fed 1. Clearing checks 2. Acting as federal governments fiscal agent 3. Supervising member banks 4. Regulating the money supply 5. Setting reserve requirements 6. Supplying paper currency
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