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PRIDE HUGHES KAPOOR INTRODUCTION TO BUSINESS ELEVENTH EDITION. Chapter Eighteen. Understanding Money, Banking, and Credit . 18 | 1. Learning Objectives. Identify the functions and characteristics of money

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chapter eighteen

PRIDE HUGHES KAPOOR

INTRODUCTION TO

BUSINESS

ELEVENTH EDITION

Chapter Eighteen

Understanding Money, Banking, and Credit

18 | 1

learning objectives
Learning Objectives
  • Identify the functions and characteristics of money
  • Summarize how the Federal Reserve System regulates the money supply in order to maintain a healthy economy
  • Describe the organizations involved in the banking industry
  • Identify the services provided by financial institutions
  • Understand how financial institutions are changing to meet the needs of domestic and international customers
  • Explain how deposit insurance protects customers
  • Discuss the importance of credit and credit management

18 | 2

the great recession
The Great Recession
  • Be prepared to discuss the Great Recession, the most recent severe global economic recession
    • How severe was it?
    • What triggered the wave in foreclosures?
    • Why did so many people and businesses have to file for bankruptcy?
    • Why is borrowing money more difficult in a recession?

18 | 3

what is money
What Is Money?
  • Define
    • Barter System
    • Money
    • Consumer Price Index
    • Purchasing Power
  • Know the Functions of Money
    • Medium of Exchange
    • Measure of Value
    • Store of Value

18 | 4

characteristics of money
Characteristics of Money
  • Know the key Characteristics of Money
    • Divisibility
    • Portability
    • Stability
    • Durability
    • Difficulty of Counterfeiting

18 | 5

the supply of money m1 and m2
The Supply of Money: M1 and M2
  • Define
    • Demand Deposit
    • Time Deposit
  • What are the twoMain Measures of the Supply of Money? Be able to contrast them
    • M1
    • M2

18 | 6

the federal reserve system
The Federal Reserve System
  • Be prepared to explain what The Federal Reserve System is and what it does
  • What was the Fed’s response to the most recent economic crisis?
  • How does the Fed regulateReserve Requirements and make more orless required reserves?
  • How does the Fed regulate the Discount Rate?
    • Why is it important to regulate the discount rate?
  • What is involved in the Fed’s Open Market Operations?
  • What other responsibilities does the Fed have?

18 | 7

the american banking industry
The American Banking Industry
  • Define
    • Commercial Bank
      • National Bank
      • State Bank
    • Savings and Loan Associations (S&Ls)
    • Credit Unions
    • Mutual Savings Banks
    • Insurance Companies
    • Pension Funds
    • Brokerage Firms
    • Finance Companies
    • Investment Banking Firms

18 | 8

careers in banking
Careers in Banking
  • Know the traits of successful bankers
    • Honesty
    • Ability to interact with people
    • Strong background in accounting
    • Appreciation for the banking-finance relationship
    • Basic computer skills

18 | 9

services provided by financial institutions
Services Provided by Financial Institutions
  • Be familiar with Traditional Services Provided by Financial Institutions
    • Checking Accounts
      • Check
      • NOW Accounts
    • Savings Accounts
      • Passbook Savings Account
      • Certificate of Deposit (CD)
    • Short- and Long-Term Loans
      • Line of Credit
      • Revolving Credit Agreement
      • Collateral
    • Credit-Card versus Debit Card Transactions
  • What are some Electronic Services and International Services provided by financial institutions?

18 | 10

changes to the banking industry
Changes to the Banking Industry
  • Be prepared to discuss Anticipated Changes in the Banking Industry
    • What global events and trends have changed and are changing the banking industry?
      • Globalization
      • Economic Cycle
      • Technology
      • Consumer Demands
      • Regulatory Issues

18 | 11

online and international banking
Online and International Banking
  • Know the advantagesand disadvantagesof Online Banking
  • Define Electronic Funds Transfer (EFT) System
    • How has this system changed how banks do business?
      • Automated Teller Machines (ATMs)
      • Automated Clearinghouses (ACHs)
      • Point-of-Sale (POS) Terminals
      • Electronic Check Conversion (ECC)
  • Know the popular methods of paying for Import and Export Transactions
    • Letter of Credit
    • Banker’s Acceptance
    • Currency Exchange

18 | 12

the fdic and ncua
The FDIC and NCUA
  • Define and give a brief history and overview of
    • Federal Deposit Insurance Corporation (FDIC)
    • National Credit Union Association (NCUA)
  • How much is each FDIC orNCUA account insured to?

18 | 13

effective credit management
Effective Credit Management
  • Define
    • Credit
    • Borrower
    • Lender
  • Be prepared to discuss how Individualsand Businessescan get money/loans from a bank after a credit crisis
  • Know the Five Csof Credit Management
    • Character
    • Capacity
    • Capital
    • Collateral
    • Conditions

18 | 14

checking credit information
Checking Credit Information
  • Know some reliable Credit Information Sources regardingBusinesses andIndividuals
  • Be prepared to explain the Fair Credit Reporting Act
  • What is the Credit Card Act of 2009?
  • How are the Fair Credit Reporting Act and the Credit Card Act of 2009 different?
    • What are they designed to do?

18 | 15

sound collection procedures
Sound Collection Procedures
  • Be prepared to discuss Sound Collection Procedures
  • What are effective Collection Techniques?

18 | 16