3. What is Money?
Anything that serves as a medium of exchange, a store of value, and a
unit of measure.
Medium of Exchange:
A function of money that means it will be accepted as payment for goods
and services.
Government issues money in a form of currency.
Descriptions and characteristics of money:
Issued & exchanged in Many forms:
Coins, bills, banknotes—(checks, loans)
Protected by government to prevent counterfeiting:
Bills use special ink, watermarks, colors and holograms
Money design is modified every 7 – 10 years.
Coins have rigid edged, special lettering and unique colors.
6. Goods/Services are exchanged in the U.S. economy
with money, except when using the “Barter” strategy:
Barter:
The act of trading goods/services between parties without the use of
money. Can use your own goods/services, skills or other trade/labor
resources
The U.S. Currency has value:
Money is not backed by gold—its value is based on confidence in
and the strength of government.
FIAT MONEY:
Money declared by federal government to be legally tendered.
Role of the U.S. Dept. of Treasury:
Printing/minting currency through the Bureau of Engraving/US.
Mint.
Federal taxes collected by or paid to Internal Revenue Service
(IRS). This is the agency of the Dept. Of Treasury.
7. The United States has become a…
Cashless Society:
Focuses on methods other than cash that are used to
receive, earn, and/or pay for goods and services.
“Cashless Society” Examples include:
Gift Cards:
Store or agency specific cards that have a money balance.
Ex: Dunkin Donuts, Visa Cards, Metro Cards.
Debit Cards:
Cards that allow consumers to draw money directly from
bank or savings accounts.
Can have the potential for unwanted fees.
PIN or signature-based transactions can sometimes become
credit card transactions.
8.
9. “Cashless Society” Examples continued:
Pre-paid Debt Cards:
Allows consumers without credit cards or bank accounts to
make card purchases or get cash via ATM networks.
Advantage: Cannot overdraw account.
Disadvantage: Unwanted/unnecessary fees.
Money Order:
Certificate that allows payee to receive cash on demand.
Can be obtained for a small fee.
Can be cancelled by issuing a “stop-payment.”
Ex: Traveler's Checks.
10. “Cashless Society” Examples continued:
Check:
A written, dated and signed order from drawer that
directed a bank to pay a definite sum of money to a payee.
Can also be issued in form of CASHIERS CHECK or BANK CHECK.
Electronic Transfer (or EFT – electronic funds transfer):
An online direct deposit payment to the account of payee.
Ex: Online payment of bills.
Credit Card:
Card issued by a financial company giving the holder an
option to borrow funds at the point-of-sale.
Can be issued by banks, financial institutions and by
department stores (STORE CARDS).
Earning Interest and Dividends.
