Chapter 10 Section 1 Money is anything that serves as a medium of exchange a unit of account and a store of value What is Money 1 Medium of exchange anything that is used to determine value during the exchange of goods and ID: 1027686
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1. Chapter 10Money and Banking
2. Chapter 10Section 1
3. Money is anything that serves as a medium of exchange, a unit of account and a store of valueWhat is Money?
4. 1) Medium of exchange- anything that is used to determine value during the exchange of goods and services2) Unit of account- a means of comparing the values of goods and services3) Store of value- something that keeps its value if it is stored rather than usedThe Three Uses of Money
5. The coins and paper bills used as money in a society are called currency. What is Currency?
6. 1) Durability- Objects used as money must withstand wear and tear2) Portability- Easy to carry around and transfer3) Divisibility- Easily divided into smaller amounts 6 Characteristics of Money
7. 4) Uniformity- all units of money must be identical5) Limited Supply- Federal Reserve System controls supply of money in circulation6) Acceptability- everyone in economy must be able to exchange the objects that serve as money for goods and services6 Characteristics of Money
8. Chapter 10Section 2
9. 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.History of American Banking
10. 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.History of American Banking
11. Chapter 10Section 3
12. The money supply is all the money available in the U.S. economy.Measuring the Money Supply
13. Banks perform many functions and offer many services to consumers1) Store money- its safe and convenient2) Credit Cards- cards entitling their holders to buy goods and services based on the card holders promise to payBanking Services
14. 3) Saving money- the most common options are:Savings accountsChecking accountsMoney Market AccountsCertificates of Deposits (CDs)Banking Services
15. 4) Loans- Make loans to help new businesses and help established businesses' grow5) Mortgages- a specific loan used to purchase real estateBanking Services
16. Banks make money of interest rates they receive from consumers who have taken loansInterest is the price paid on the use of borrowed moneyHow Banks Make a Profit
17. The rise of computers in banking as increased dramaticallyAutomated Teller Machines (ATM)- can deposit, withdraw cash and obtain account informationDebit Cards- used to withdraw money from checking accountElectronic Banking
18. Automatic Clearing Houses (ACH)- transfer funds from customers’ accounts into creditors’ accountsHome Banking- can check balances or make transfers from home computerStore Value Cards- have magnetic strips or computer chips with account balance informationElectronic Banking