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Exploring business Chapter 20

by: Armani Lindsay

Exploring business Chapter 20 BUS - 10123 - 002

Marketplace > Kent State University > BUS - 10123 - 002 > Exploring business Chapter 20
Armani Lindsay
GPA 3.37

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About this Document

Chapter 20 notes! Again sorry for the delay it takes a lot of time to edit them!
Eric Von Hendrix (P)
Class Notes
Exploring Business, kent state, Chapter 20
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This 5 page Class Notes was uploaded by Armani Lindsay on Wednesday February 10, 2016. The Class Notes belongs to BUS - 10123 - 002 at Kent State University taught by Eric Von Hendrix (P) in Winter 2016. Since its upload, it has received 26 views.


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Date Created: 02/10/16
Chapter 20 Money is anything people generally accept as payment for goods and services. It is also Portable, divisible, stable, durable, and unique. Janet Yellen is the first female president of the Federal Reserve Bank: 1. The Board of Governors 2. The Federal Open Market Committee 3. 12 Federal Reserve Banks 4. 3 Advisory Councils 5. The member banks of the system Tobarter is the direct trading of goods or services for other goods or services. Bitcoin Digital currency created in 2008. It has no central regulating authority. You can create transactions without middlemen. However valuing it is difficult. Money Supply is The amount of money the Federal Reserve makes available for people. The money supply is referred to as: - M1 -- Money that can be accessed quickly (coins, paper money, travelers’ checks, etc.). - M2 -- M1 + money that may take a little time to obtain (savings accounts, mutual funds, etc.). - M3 -- M2 + big deposits like institutional money market funds. What makes the dollar fall or rise is the position of the U.S. economy relative to other global economies. • Rising dollar value: The amount of goods and services you can buy with a dollar increases. • Falling dollar value: The amount of goods and services you can buy with a dollar decreases. When the US dollar is falling the demand for US products rise. A favorable exchange rate for U.S. companies increases profits in foreign markets. U.S. tourism increases which is good for hotels, resorts, theme parks, and retailers that serve international travelers. THIS CHART IS VERY IMPORTANT A cash shortage problem in 1907 led to the creation of the Federal Reserve System. • Under the Federal Reserve Act of 1913, all federally chartered banks had to join the Federal Reserve. US Banking system consists of • Commercial banks-- A profit-seeking organization that receives deposits from individuals and corporations in the form of checking and savings accounts and uses those funds to make loans. 2 types of customers: Depositors and Borrowers. Services include: Demand Deposit -- The technical name for a checking account; money is available on demand from the depositor. • Time Deposit -- A savings account; a bank can require a prior notice before you make a withdrawal. • Certificate of Deposit -- A savings account that earns interest, to be delivered on the certificate’s maturity date. • Savings and loan associations-- A financial institution that accepts both savings and checking deposits and provides home mortgage loans. They are Often known as thrift institutions because their original purpose was to promote customer thrift and home ownership. • Credit unions-- Nonprofit, member-owned financial cooperatives that offer the full variety of banking services to their members. As nonprofits, credit unions enjoy an exemption from federal income taxes. • Nonbanks-- Financial institutions that accept no deposits, but offer many of the services provided by regular banks. Nonbanks include: • Life insurance companies Commercial finance companies • Corporate financial services • Pension funds • Brokerage firms Dealstruck is a new type of alternative, nonbank lender. It uses a peer-to-peer model where wealthy investors provide capital for the loans. Interest rates range from 8 to 24% for loans up to $250,000 and can stretch for a period of three years. Attracting customers to online banking: • Free identity theft protection • Free credit score monitoring • Personal financial management • Instant messaging service • Bank’s blog Banking Crisis • Almost 5 million households suffered through housing foreclosures since 2007. • Since the banks owned the mortgages, their profits declined. • This led to a banking crisis and the government had to help the banks out. • Assigning blame to only one agency is not possible, but it had to be fixed. • Money exchange allows companies to go to a bank and exchange currencies to use in a particular country (i.e. dollars for euros). • The IMF and the World Bank are both trying to come up with answers to the global issues that have become very serious. • Christine Lagarde, managing director of the IMF, fears the financial crisis did lasting harm to the potential pace of growth in many global economies. • The IMF and World Bank are both trying to solve key global issues before there is another serious crisis. • The Federal Deposit Insurance Corporation (FDIC) -- An independent agency of the U.S. government that insures bank deposits up to $250,000. • The Savings Association Insurance Fund (SAIF) -- Insures holders of accounts in savings and loan associations. • The National Credit Union Administration (NCUA) -- Provides up to $250,000 coverage per individual depositor per institution. • Electronic Funds Transfer System -- Messages about a transaction are sent from one computer to another so funds can be transferred quickly and more economically. • Debit Card -- Serves the same function as a check; it withdrawals funds from a checking account. • Smart Card -- A combination of a credit card, debit card, phone card, driver’s license, and more. • Letter of Credit -- A promise by the bank to pay the seller a given amount if certain conditions are met. • Banker’s Acceptance -- A promise the bank will pay some specified amount at a particular time. • World Bank -- Lends most of its money to less-developed nations to improve their productivity and help raise standards of living and quality of life. • International Monetary Fund (IMF) -- Fosters cooperative monetary policies that stabilize the exchange of one national currency for another. About 188 countries are a part of the IMF.


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