1. MoneyMoney
Who needs it?Who needs it?

2. Definition of Money
Anything that people
accept as a standard form
of payment.

3. Characteristics of Money
1. It must be scarce.
The less there is of something, the
more valuable it becomes!
1. It must be accepted.
People must believe that it has value,
and will have value later, no matter
what happens.
1. It must be divisible.
Can you make change?

4. Characteristics of Money
4. It must be portable
Easily carried
4. It must be durable.
Long-lasting

5. Functions of Money
1. Medium of Exchange
Money is an alternative to Bartering
1. Standard of Value
Money makes it possible to place
value on an object.
1. Store of Value
Money holds it’s value over time, and
can be stored or saved.

6. Learning Goal
To be able to compare
various financial
institutions and the
services they offer.

7. 3 Main Functions of Banks
1. Storing Money – Bank Accounts
Deposit: Putting money into an
account
Withdrawal: Taking money out of an
account

8. 3 Main Functions of Banks
1. Storing Money – Bank Accounts
Checking Account – Storing money
short term so you can use it often.
Advantage – Easy Access
Disadvantage – Costs money
(Sometimes)
Savings Account – Storing money
long term
Advantage – Earn Interest
Disadvantage – Limited Access

9. 3 Main Functions of Banks
2. Transferring Money
Cashing Checks
Taking money from your account and
giving you cash.
Depositing Checks
Taking money from one account and
transferring it to another.
Electronic Funds Transfer (EFT)
No paper – Money automatically
transferred between accounts
Example: Your paycheck is Direct Deposit

10. 3 Main Functions of Banks
3. Lending Money
For any loan you must put down
“Collateral”
For any loan, you must pay “Interest”
The bank uses that money to pay the
interest to savings account customers.

11. 3 Main Functions of Banks
3. Lending Money
Types of Loans:
Mortgage Loan: Loan made to
purchase real estate
Commercial Loan: Loan made to a
business to buy supplies and equipment

12. 3 Main Functions of Banks
3. Lending Money
Types of Loans:
Line of Credit: An amount of money set
aside for preferred customers that is
available at any time.
Individual Loan: Loan made to an
individual to pay for personal items like
car repairs or vacations.

13. Types of Banks
Commercial Banks
“Full-Service Banks”
Operate to make a profit by charging
interest
Savings & Loan Associations
Originally ran by Government.

14. Types of Banks
Credit Unions
Non-Profit Bank for Organizations
Brokerage Firms
NOT a Bank
Provides Investing Advice and
Products

15. Bank Services
Checking & Savings Accounts
Money Market Accounts
Certificates of Deposit
Loans
Mortgages
Safe Deposit Boxes

16. Learning Goal
To be able to identify the
major functions of The
Federal Reserve System.

17. Federal Reserve System
AKA: “The Fed”
The central banking organization in the
US
Set-up by Congress to end financial
panics
Includes:
12 Federal Reserve District Banks
25 Branch Banks
5,000 Member Banks
Run by a board of Directors

18. •12 District Banks
• 25 Branch Banks

19. Federal Reserve System
The 6 Functions of The Fed:
1. Clearing Checks
2. Acting as the Federal Government’s
Fiscal Agent
3. Supervising Member Banks
4. Regulating the money supply
5. Setting reserve requirements
6. Supplying paper currency

20. Federal Reserve System
F.D.I.C.
Federal Deposit Insurance Corporation
Federal government agency that protects
bank accounts and guards against bank
panics
Each account is insured up to $250,000.00