1. Chapter 12 Money and Financial Institutions
12.1
Money and Banking

2. The Purpose of Money
Money: A standard of value and a means of exchange or payment.
Monetary System: A system in which goods and services are directly exchanged using money.

3. Functions of Money
Medium of exchange- anything that is generally accepted as a measure of value and wealth
Standard of value- a way to measure the value of goods and services
Store of value- it holds its values over time and can be stored or saved

4. Characteristics of Money
Money must be accepted. People must be willing to accept money in return for goods and services.
Money must be scarce. An overabundance of money will reduce its value.

5. Functions of Banks Financial Institutions: A firm that manages money.
Bank account: A record of the amount of money a customer has deposited into or withdrawn from a bank.
Deposit: The money put in a bank account
Withdrawal: The money taken out of a bank account
Interest: A rate that the bank pays customers for keeping their money

6. Transferring Money
Electronic Funds Transfer: Allows money to be transferred from one bank to another
Direct Deposit: The electronic transfer of a payment directly from the payer’s bank account to that of the party being paid

7. Lending the Money
Collateral: Property or goods pledged by a borrower to use as security against a loan if it is not repaid.
Mortgage: An agreement in which a borrower gives a lender the right to take the property if the loan is not repaid

8. Other Services
Safe Deposit Box: A secure box in a bank’s vault used for the safe storage of a customer’s valuables.

9. Homework Type out all definitions for Ch. 12
Complete the 12.1 Reading Activity and Graphic Organizer
Review the questions on pg. 200, 1-3