Transcript Money and Banking ch 13

Money and Banking
 1. Median of Exchange= any items that
sellers accept as payment.
 2. Standard of Value= a way to measure
the relative value of goods by comparing
their prices.
 3. Store of Value= it can be saved, or
stored for later use.
Characteristics of
Money:psadd
 1. Portability
 2. Stability
 3. Acceptability
 4. Durability
 5. Divisibility
Sources of Money’s Value
 Commodity money: An item used as money that
also has value of its own (like gold or tobacco ).
 Representative money: An item that has value
because it “represents” something else. And
can be exchanged for that something else. (A
sheet of paper that can be redeemed for
currency.)
 Fiat money: this money has value because a
government “fiat”, or decree states that it has
value (like currency= coins and paper bills).
Forms of Money
 1. Coins and paper money
 2. Demand deposits= checking
accounts. Checks can be paid “on
demand” at any time.
 3. Near money= An asset that can easily
be converted into cash when needed,
like savings accounts and time deposits.
Trends
 1. Automation also called Electronic
Funds Transfer (EFT), means the
reliance on computers to handle financial
transactions.

A. ATM’s (Automatic Teller Machines) allow
you to deposit or withdraw money from an
account or transfer funds from one account
to another.


B. Automatic Clearinghouse Service (ACH) a
system where banks can transfer funds from your
account without suing money, so that customers
can pay bills without writing checks.
C. Point of Sale Transactions Allows customers to
pay for merchandise on the spot using a Debit
Card, which will pay for merchandise automatically
by transferring money from the buyer’s account to
the seller’s account. Customers who use debit
cards must supply their PIN (Personal Identification
Number) to use the card.
 D. Home Banking- Customers are now
able to do banking on the Internet to
transfer funds, pay bills, and invest.
 2. Deregulation, or the reduction of
government restrictions. This
deregulation led to increased
competition and regional banking.
 3. Financial Troubles (Due mostly to
deregulation)

A. Loan default is when borrowers are
unable to make payment on their loans.

B. Bank Failures (see chart on page 231).