Objective: What is money? What are the three uses of money ...

CA Standard(s) Cover

12.2 Students analyze the e
market economy in a g

9. Describe the functions of the

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red

elements of America’s
global setting.
e financial markets.

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Measuring the Money

The money supply is all th
United State

M1

•  M1 consists of assets that
have liquidity, or the ability to
be used as, or easily converted
into, cash.

•  Components of M1 include all
currency, traveler’s checks,
and demand deposits.

•  Demand deposits are the
money in checking accounts.

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Supply

he money available in the
es economy.

M2

•  M2 consists of all of the assets
in M1, plus deposits in savings
accounts and money market
mutual funds.

•  A money market mutual fund
is a fund that pools money
from small investors to
purchase government or
corporate bonds.

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Banking Services

Banks perform many functions an
consumers.

Storing Money
Banks provide a safe, convenient place fo

Saving Money
Four of the most common options banks
1.  Checking Accounts (*Demand Deposi
*Demand deposits make money available
by writing a check, using a debit card or t
3. Money Market Accounts

Loans
By making loans, banks help new busines

Mortgages
A mortgage is a specific type of loan that

Credit Cards
Banks issue credit cards - cards entitling
based on each holder's promise to pay.

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nd offer a wide range of services to

or people to store their money.

offer for saving money are:
its) 2. Savings Accounts
whenever the depositor demands money
the ATM.

4. Certificates of Deposit (CDs)

sses get started or grow.

is used to purchase real estate.

their holder to buy goods and services

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How Banks Make a Pr

•  The largest source of income for b
from customers who have taken lo

•  Interest is the price paid for the us

How Banks Make a Profit

Money enters bank

Deposits from BA
customers

Interest from
borrowers

Fees for
services

Chapter 10 Section Bank
required

M

rofit

banks is the interest they receive
oans.
se of borrowed money.

ANK Money leaves bank

retains Interest and
d reserves withdrawals to

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Money loaned
to borrowers:
• business loans
• home
mortgages
• personal loans

Bank’s cost of
doing business:
• salaries
• taxes
• other costs

Types of Financial Ins

•  Commercial Banks
–  Commercial banks offer checkin
loans.

•  Savings and Loan Associations
–  Savings and Loan Associations
money for home-building in the

•  Savings Banks
–  Savings banks traditionally serv
and transactions than commerc

•  Credit Unions
–  Credit unions are cooperative le
groups, usually employees of a

•  Finance Companies
–  Finance companies make install

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stitutions

ng services, accept deposits, and make

s were originally chartered to lend
mid-1800s.
ved people who made smaller deposits

cial banks wished to handle.
ending associations for particular
specific firm or government agency.
lment loans to consumers.

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Electronic Banking

The role of computers in banki

Automated Teller Machines (ATMs)
Customers can use ATMs to deposit m
account information.
Debit Cards
Debit cards are used to withdraw mone
Home Banking
Many banks allow customers to check
transfers and payments via computer.
Automatic Clearing Houses (ACH)
An ACH transfers funds automatically
creditors' accounts.
Stored Value Cards
Stored value cards are embedded with
with account balance information.

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ing has increased dramatically.

money, withdraw cash, and obtain
ey directly from a checking account.
k account balances and make
from customers' accounts to
h magnetic strips or computer chips

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Current Event Video

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Section 3 Assessmen

1. The money supply of the United States is
(a) M1
(b) M1 and parts of M2
(c) all the money available in the econo
(d) all the money available in the econo
borrow

2. Why are funds in checking accounts call
(a) they are available whenever the dep
(b) they are not liquid
(c) they are usually in great demand
(d) they are held without interest by the

Check out B of A’s website…

Chapter 10 Section M

nt

s made up of which of the following?

omy
omy plus money that the country could
led demand deposits?
positor demands them by writing a check

e bank

… Click Here!

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Section 3 Assessmen

1. The money supply of the United States is
(a) M1
(b) M1 and parts of M2
(c) all the money available in the econo
(d) all the money available in the econo
borrow

2. Why are funds in checking accounts calle
(a) they are available whenever the dep
(b) they are not liquid
(c) they are usually in great demand
(d) they are held without interest by the

Check out B of A’s we

Chapter 10 Section M

nt

made up of which of the following?

omy
omy plus money that the country could
ed demand deposits?
positor demands them by writing a check

e bank

ebsite… Click Here!

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HW

•  Read pages 258-2
questions 1-4 p. 2

•  Ch. 10 Test on Fri
•  Study for Jeopard

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264 and complete
264.
iday.
dy tomorrow

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Khan Academy Video

Chapter 10 Section M

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