Money and Banking Industry
- money is a current medium of exchange in the form of coins and banknotes; coins and banknotes collectively
- three uses of money: a medium of exchange (you have something I want so I give you money), measure of value (to put a price tag on things), and a store value (something you can keep and tomorrow it will still be worth something)
- 6 characteristics of money:
durable, easily counted and measured, generally acceptable, convenient, easily controlled, inexpensive to produce
- sources of money's value:
Commodity Money (Consists of objects that have value in and of themselves and that are also used as money), Representative Money (Makes use of objects that have value because that holder can exchange them for something of value.), Fiat Money (an order or decree)
History of Banking
- Andrew Jackson removed all federal funds from the bank after his reelection in 1832.
- The federal reserve is the nation's central bank (a banker's bank) and has the resources to lend to other banks.
- The FDIC is the Federal Deposit Insurance Corporation. It was created in 1933 to insure customer deposits in case of a bank failure.
- The current U.S. money supply is 3049.40 USD billion.
- Banks provide services like checking accounts, savings accounts, certificates of deposit, and loans.
- How Banks Make A Profit: Banks use depositors' money to make loans. The amount of interest the banks collect on the loans is greater than the amount of interest they pay to customers with savings accounts—and the difference is the bank's' profit.
- The Different Types of Financial Institutions:
Depositary institutions- deposit-taking institutions that accept and manage deposits and make loans, including banks, building societies, etc.
Contractual institutions- insurance companies and pension funds
- How The Electronic Banking Affected The Banking World:
provides consumers with a more convenient method of conducting business, consumers can check account balance any time, affects commerce across many trades and industries