Unit 2A: MoneyAll About Money

Mr. ElsesserIntroduction to

Financial Management

DO NOW:BRAINSTORM:

Answer this question…List as many qualities and characteristics as you can about MONEY!!!

All About MoneyWhat is Money?

Anything that serves as a medium of exchange, a store of value, and a unit of measure.

Medium of Exchange: A function of money that means it will be accepted as payment for

goods and services.

Government issues money in a form of currency.

Descriptions and characteristics of money: Issued & exchanged in Many forms:

Coins, bills, banknotes—(checks, loans) Protected by government to prevent counterfeiting:

Bills use special ink, watermarks, colors and holograms Money design is modified every 7 – 10 years. Coins have rigid edged, special lettering and unique

colors.

All About Money

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All About MoneyGoods/Services are exchanged in the U.S. economy with money, except when using the “Barter” strategy:

Barter: The act of trading goods/services between parties without the use

of money. Can use your own goods/services, skills or other trade/labor resources

The U.S. Currency has value: Money is not backed by gold—its value is based on confidence

in and the strength of government. FIAT MONEY:

Money declared by federal government to be legally tendered.

Role of the U.S. Dept. of Treasury: Printing/minting currency through the Bureau of Engraving/US.

Mint. Federal taxes collected by or paid to Internal Revenue Service

(IRS). This is the agency of the Dept. Of Treasury.

All About MoneyThe United States has become a…

Cashless Society: Focuses on methods other than cash that are used to receive, earn, and/or pay for goods and services.

“Cashless Society” Examples include: Gift Cards:

Store or agency specific cards that have a money balance. Ex: Dunkin Donuts, Visa Cards, Metro Cards.

Debit Cards: Cards that allow consumers to draw money directly from bank or savings accounts. Can have the potential for unwanted fees. PIN or signature-based transactions can sometimes

become credit card transactions.

All About Money

All About Money“Cashless Society” Examples continued:

Pre-paid Debt Cards: Allows consumers without credit cards or bank accounts to make card purchases or get cash via ATM networks. Advantage: Cannot overdraw account. Disadvantage: Unwanted/unnecessary fees.

Money Order: Certificate that allows payee to receive cash on demand. Can be obtained for a small fee. Can be cancelled by issuing a “stop-payment.”

Ex: Traveler's Checks.

All About Money“Cashless Society” Examples continued:

Check: A written, dated and signed order from drawer that directed a bank to pay a definite sum of money to a payee.\ Can also be issued in form of CASHIERS CHECK or BANK

CHECK.

Electronic Transfer (or EFT – electronic funds transfer): An online direct deposit payment to the account of payee. Ex: Online payment of bills.

Credit Card: Card issued by a financial company giving the holder an option to borrow funds at the point-of-sale. Can be issued by banks, financial institutions and by

department stores (STORE CARDS).

Earning Interest and Dividends.