1. Trade and Banking
NCSCOS 8.08/8.09

2. 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

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

4. 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

5. 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

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

7. 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

8. 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

9. 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

10. 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