business ch 12

Describe the functions and characteristics of money

Medium exchange store value

Why do you think coins have been a more desirable form of money and paper currency throughout history

mineral deposit too much paper money printing

Explain the major functions of the federal reserve system in the US economy

Clearing checks funds are transferred from one bank to another on someone writes or deposit a check

Compare and contrast 3 types of banks that are found in our economy

Commercial banks offer the entire range of banking services they serve individuals and businesses. Credit unions are set up by organizations for their employees to use the federal reserve is the central reserve bank of the United States this is the banker's bank and it monitors the money supply

Why do you think banks pay interest on deposits left in savings accounts

Banks pay interest on deposits left in savings accounts because that is the way of encouraging people to keep their money in their savings account

How can the reserve requirement for banks be used to slow the econemys growth

Because a member banks must keep a certain percentage of deposits as reserves

The British pound cannot be used in most US stores to buy goods and services why do you think this is so

Because the British pound and the American dollar are not interchangeable they do not equal the same amount of money

Credit cards can be used to make purchases however credit cards are not considered money why do you think this is so

Credit cards are not money because you have to put money on to the card if there is no money on the card you get charged to still pay the bill

What do you think would happen if all the depositors of a bank requested their deposits at the same time what is done to keep this from happening

If all the positives wanted their deposits at the same time the banquet not have enough money or any money left this is prevented by allowing people to only take so much out of their account at a time

Discuss the 3 main functions on the bank

Storing money transferring money lending money