Money and Banking
By David Jara
What is money?
- Anything that serves as a medium of exchange, a unit of account, and a store value.
What is money?
- Money as a Medium of exchange, something that is used to determine value during the exchange of goods and services
- Money as a unit of account, comparing the values of goods and services.
- Money as a store of value, something that keeps its value if it is stored rather than used.
- Durability- Must withstand physical abuse
- Portability- money needs to be easily transportable
- Divisibility- money must be easily divided into smaller portions of units
- Acceptability- Everyone must be able to exchange money for goods and services
- Limited supply- money must be available only in limited quantities.
- Uniformity- units of money must be uniform in what they can buy.
- Commodity Money- Consists of objects that have value in themselves.
- Representative Money- Has value because the holder can exchange it for something else of value.
- Fiat Money- also called a legal tender. has value because the government said it was acceptable.
- Fiat Money or Legal Tenders
History of Banking
What was the role of the First Bank of the United States created in 1791?
- To stabilize the nations credit.
- Andrew Jackson Vetoed it.
- The federal reserve is a central bank that can loan money to smaller banks. It is the bank that all banks go to.
- The Federal Deposit Insurance Corporation, preserves and promotes public confidence in the U.S. financial system.
How do economist measure the U.S. money supply?
- there are two methods, they M1 and the M2. The M1 measures paper currency and coins while the M2 measures fiat money and demand deposits.
- Money protection, accounts, loans, and pays you interest.
- When you take loans from the bank you have to pay them back the amount you initially took and then a certain percent more. Also in fees and over charges.
- Depository institutions and contractual institutions.
- Increase in criminal activity, Limits teller transactions, Financial integration, and 24 hour acess