Money

and The Bankning Industry

money

  1. Money is anything that serves as a medium of exchange, a unit of account and a store of value
  2. the three uses of money are
  • medium of exchange- is anything that is used to determine value during the exchange of goods and services
  • Unit of account- is a means for comparing the values of goods and services
  • Store of Value- a store of value is something that keeps its value it is stored rather than used the
  1. six characteristics of money are
  • durability- objects used money must withstand wear and tear
  • portability- people need to be able to take money with them as they go about their business
  • divisibility- money must be divided into smaller denominations
  • uniformity- any two units of money must be uniform, the same, in terms of what they will buy
  • limited supply- money must be available only in limited quantities
  • acceptability- everyone must be able to exchange money for goods and services
  1. the sources of money's value is
  • commodity money- commodity money consists of objects that have value in themselves
  • representative money- representative money has the value because the holder can exchange it for something else of value
  • fiat money- has value because the government decreed that is an acceptable means to pay debts
  1. the federal reserve is the source of value for money in the united states

History of Banking

  1. the role of the First Bank of the United States in 1791 was created to
  • establish financial order
  • establish credit
  • resolve the issue of fiat currency
  1. in 1832 when the Bank of 1811 lost its charter Andrew Jackson vetoed the renewal charter. Causing the free banking era.
  2. the federal reserve system serves as the nations first true national bank. they also
  • influence money and credit conditions to best influence the economy
  • supervise and regulate banks
  • maintain the stability of financial systems
  • providing certain financial services to the U.S government
  1. the FDIC is the federal deposit insurance corporation and they insure costumers deposits up to 250,00

Banking Today

  1. economists measure the U.S. money supply using different labels M1 which has the highest liquidity and M2 which is the money in demand deposits, near money and fiat money. The current U.S. money supply is M1 totaled 1.4 trillion and M2 totaled 7.7 trillion.
  2. banks provide services like different forms of accounts and loans
  3. banks make money by leading there money and in return they charge an interest rate on the loan for a profit
  4. diffrent types of financial institutions are
  • commercial banks
  • investment banks
  • insurance companies
  • brokerages
  • investment companies
  1. Electronic banking affected the banking world by
  • limiting teller transactions
  • 24-hour access
  • increase in criminal activity
  • financial integration