1. Consumers & Savers A consumer is anyone who buys goods or services for personal use. Consumer spending is the biggest component of total spending in the U.S. economy.

2. Sources of Income  Income from work – wages, salary  Income from wealth – interest, capital gains How can you accumulate wealth? Save. How much people save depends on their income, their expectations, interest rates, & tax laws.

3. Saving  Create a budget: set financial goals, estimate income, estimate expenditures.  Factors to consider: safety, rate of return, liquidity.  Where people put their savings: savings accounts, certificates of deposit, money market, pension funds, corporate stocks, U.S. savings bonds, other government securities, mutual funds, corporate bonds, real estate, insurance.

4. Consumer Credit  Consumer credit enables you to enjoy goods & services before you pay for them fully.  There are two strings attached to every credit purchase: you must repay the principal (the amount borrowed) & interest plus other costs.  Consumer credit is either loan credit (borrow money to finance a purchase) or sales credit (buy goods & services now & pay for them later).  Kinds of credit: home mortgages, auto & consumer loans, charge accounts, credit cards.

5. Terms to know  Stocks – represent ownership in a business  Bonds – are certificates of a corporation’s or the government’s indebtedness to the holder – a loan to be repaid with interest.  Dow Jones Industrial Average – one of several indices that serves as a pulse on the market  The SEC – Securities & Exchange Commission is a federal agency responsible for protecting investors in the sale of securities

6. Money can be anything that is generally accepted in payment for goods & services  Money plays three roles: it serves as a medium of exchange, a store of value, & a measure of prices.  Money, as a practical matter, should have the following qualities: StabilityUniformity PortabilityDivisibility DurabilityRecognizability

7. The Federal Reserve System is the nation’s banking system  It is responsible for issuing paper currency, regulating the quantity of money in circulation, & with other agencies, supervising commercial banks.  It consists of 12 District Banks, a Board of Governors, the Federal Open Market Committee, & three advisory councils.