Money and the Banking System Objective: Examine the Banking System and Money
How Money is Used <ul><li>Money is used as a medium of exchange  </li></ul><ul><li>Money is also used as a standard of val...
Characteristics of Money <ul><li>Must be durable, portable, divisible, scarce, accepted and stable in value </li></ul><ul>...
Banking in the U.S. <ul><li>America was founded in 1776 </li></ul><ul><li>With no central currency </li></ul><ul><li>1791 ...
Banking in the U.S. <ul><li>With the national bank closed, smaller banks begin to print their own money </li></ul><ul><li>...
Banking in the U.S. <ul><li>In 1816 the U.S. again established a national bank </li></ul><ul><li>1832 The Bank is again cl...
What Banks Do <ul><li>Three common services are checking, savings, and loans </li></ul><ul><li>A checking account is money...
Banking <ul><li>Banks charge more interest on loans than it pays on saving accounts </li></ul><ul><li>The difference betwe...
Review <ul><li>How is money used? </li></ul><ul><li>Ans. As a medium of exchange, store of value, and a standard of value ...
Review <ul><li>National Income Accounting measures what? </li></ul><ul><li>Ans. the national economy’s performance </li></...
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14 Money And The Banking System

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14 Money And The Banking System

  1. 1. Money and the Banking System Objective: Examine the Banking System and Money
  2. 2. How Money is Used <ul><li>Money is used as a medium of exchange </li></ul><ul><li>Money is also used as a standard of value or unit of accounting </li></ul><ul><li>Money can be used as a store of value </li></ul><ul><li>Diamonds and gold are often used as stores of value </li></ul>
  3. 3. Characteristics of Money <ul><li>Must be durable, portable, divisible, scarce, accepted and stable in value </li></ul><ul><li>Fiat Money- is money that is backed by the government </li></ul><ul><li>Near Money- are assets that can be redeem for money </li></ul><ul><li>Legal tender- is money that must be accepted for payment by law </li></ul>
  4. 4. Banking in the U.S. <ul><li>America was founded in 1776 </li></ul><ul><li>With no central currency </li></ul><ul><li>1791 the U.S. started the First Bank of the United States </li></ul><ul><li>In 1811 some felt the bank was too powerful and closed it. </li></ul>
  5. 5. Banking in the U.S. <ul><li>With the national bank closed, smaller banks begin to print their own money </li></ul><ul><li>When these banks went out of business their money was now worthless </li></ul><ul><li>This forced people to keep lists of which banks are good or not </li></ul>
  6. 6. Banking in the U.S. <ul><li>In 1816 the U.S. again established a national bank </li></ul><ul><li>1832 The Bank is again closed by President Jackson </li></ul><ul><li>By 1860’s the need for a central bank is clear but Congress tries other things </li></ul><ul><li>1913 Congress established the Federal Reserve System </li></ul>
  7. 7. What Banks Do <ul><li>Three common services are checking, savings, and loans </li></ul><ul><li>A checking account is money a person leaves with the bank until its needed </li></ul><ul><li>A savings account is where people store their money </li></ul><ul><li>Banks use this money for loans and pays you interest </li></ul>
  8. 8. Banking <ul><li>Banks charge more interest on loans than it pays on saving accounts </li></ul><ul><li>The difference between the two rates is profit for the bank </li></ul>
  9. 9. Review <ul><li>How is money used? </li></ul><ul><li>Ans. As a medium of exchange, store of value, and a standard of value </li></ul><ul><li>What are the characteristics of money? </li></ul><ul><li>Ans. It is durable, portable, divisible, scarce, accepted and stable in value </li></ul><ul><li>List some services offered by banks. </li></ul><ul><li>Ans. Checking, Savings, Loans, ATM, and electronic funds transfer </li></ul>
  10. 10. Review <ul><li>National Income Accounting measures what? </li></ul><ul><li>Ans. the national economy’s performance </li></ul><ul><li>What is the GDP? </li></ul><ul><li>Ans. Is the total dollar value of all final goods and services produced in the nation in a single year </li></ul><ul><li>Name the four parts of the business cycle. </li></ul><ul><li>Ans. Expansion, Peak, Recession, and Trough </li></ul>

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