Good morning! Have a piece of paper out ready to start the warmup

Warm up 1. List 3 reasons why you should save money. 2. List some of the reasons why people don’t save money 3. What are some future consequences of not saving money?

Block day- assessment CTR and SCC scores are up! You’ll get back the physical rubrics on block day after the test Agenda Review for test Personal saving- benefits Investment- personal and capital Check for understanding Essential Question What is the difference between personal saving and investment?

Review Why is paper currency a better form of money than burritos?

Ch. 8.2 Functions of Money 1.Medium of Exchange – something that is accepted by all parties as payment for goods & services. Not everyone wants burritos! 2.Measure/Standard of value – the common denominator used to express worth (we use the dollar). Not all burritos are the same! 3.Store of value – the substance maintains its value over time so doesn’t need to be exchanged or used immediately. Burritos get nasty over time!

What is currency? Coins and paper money

Saving Putting aside part of your money You can save with – Savings accounts – Retirement plans Does personal saving help or hurt the economy?

pay 8% interest on loan earn 1% interest on savings Depositor BANKS Borrower Personal saving Helps the economy grow by providing funds for business investment

Saving helps the economy grow Factor Markets Individuals/ Consumers/ Households Businesses/ Firms/ Producers Product Markets $ Payments for factors $ Income from sale of factors (gross and net) Goods & Services $ Profit (gross and net) $ Consumer Spending Factors of Production Land, Labor, Capital Factors of Production Land, Labor, Capital Goods & Services Financial Institutions commercial loans investment, consumer loans savings, fees, % payments % payments, deposits, fees

Savings Another benefit of saving is that it prepares you for retirement: – Personal savings – Social security  social security is a government run system funded by workers and employers

Who benefits most from the Social Security system?

Investment Spending something now in order to get something in the future Example of investment: buying some types of bonds or stocks

There are two types of investments Personal Investment Personal investing is practiced by individuals. Involves depositing or spending money in an effort to make a financial gain in the future. People who buy stocks or bonds are engaged in personal investing. Capital Investment Capital investing involves the factors of production. A capital investor spends money to buy physical capital used to make goods and services. When a company buys new trucks or computers it is engaged in capital investing.

Personal or capital investment? Putting $1,000 in a savings account Buying a corporate bond Building a factory Putting money in a retirement fund Buying 2 tons of rubber

3 Criteria for Investing Liquidity: The ease with which savings or investments can be turned into cash. Risk: the chance of losing some or all of the money invested. Return: earning from an investment

Check for understanding What is the difference between personal saving and investment?

Corporations – pg. 7 of BSI PKT a business that is a separate legal entity from the people who own it or work for it has same rights under the law as an individual = limited LIABILITY must file a charter in order to be incorporated = exist charter states: names and information of business number of shares of stock names of stockholders/shareholders corporations raise financial capital through the sale of stock PRIVATE corporations do not sell their stock to the public PUBLIC corporations sell their stock to the public through stock exchanges such as NYSE, NASDAQ

How a Corporation is Organized COMMON STOCKHOLDERS BOARD OF DIRECTORS CEO VICE PRESIDENT MARKETING GENERAL COUNSEL VICE PRESIDENT HUMAN RESOURCES CFO coo BONDHOLDERS PREFERRED STOCKHOLDERS