Trade and Banking NCSCOS 8.08/8.09

Functions of Money medium of exchange: trade money for goods and services store of value: hold our wealth in the form of money until ready to use measure of value: money is used to assign value to a good or service

Economic Exchange coins and currency were not always used as money – bartering system barter is used in undeveloped countries

developed countries moved to the exchange of coins & currency began by using precious metals to back up money supply demand began to exceed metals available governments issue legal tender

The Banking System offers a safe place to deposit money to save a source for borrowing when they need a loan as a reward banks pay an interest rate to borrow your money insure loans will be repaid with collateral

FDIC Federal Deposit Insurance Corporation insures up to $250,000 of all accounts if the bank fails, the federal government will pay

Types of Financial Institutions Commercial Banks offer full banking services to individuals and businesses large area of influence most people have their checking and savings accounts here

Types of Financial Institutions Savings and Loans Institutions traditionally loaned money to people buying homes takes deposits and issue savings accounts in return today perform many of the same activities as commercial banks

Types of Financial Institutions Credit Unions work on a not-for-profit basis open only to members of the group that sponsors them generally offer better rates on savings and loans

Types of Deposits time deposits demand deposits leave money for a time, earns interest certificate of deposits (CD) demand deposits funds available immediately earns little interest withdraws money by check, ATM card, or debit card postpone spending with credit cards