The Purpose of Banks

1. The Purpose of Banks Warm up: What is another analogy that begins with “Money is to an economy like ____________”

2. LEQ • How and why do banks impact the supply of money in a market economy?

3. Homework • Create a timeline of American Money and Banking • Use pages 382 and 383 in your Economics Book. • Due on Friday • Include Dates in order (14) /14 points • Create a Title for each event (14) /14 points • Include a Description for each (14) /14 points • Draw/print a picture for each (14) /14 points • Total /56 points

4. Purpose of Banks • Banks ____________, directly or indirectly, from ____________ to ____________. • The money households do not spend is called ____________. • ____________and ____________ is what households do with money they do not spend on goods and services. • ____________provides resources to ____________to be used as investment in capital goods. • When ____________ are made to borrowers, it stimulates the nation’s economy. • ____________and ____________both obtain ____________. • ____________ are one kind of a loan. • Banks receive ____________ from savers and provide loans to borrowers. • Banks provide an incentive to savers by paying ____________ on the deposits, and then charging interest to borrowers. • The difference between interest charged and interest paid is the bank’s ____________. • Banks also facilitate exchange by providing access to ____________. Bank depositors can write ____________ or withdraw ____________ in order to purchase goods and services.

5. Purpose of Banks • Banks transfer, directly or indirectly, from ____________ to ____________. • The money households do not spend is called ____________. • ____________and ____________ is what households do with money they do not spend on goods and services. • ____________provides resources to ____________to be used as investment in capital goods. • When ____________ are made to borrowers, it stimulates the nation’s economy. • ____________and ____________both obtain ____________. • ____________ are one kind of a loan. • Banks receive ____________ from savers and provide loans to borrowers. • Banks provide an incentive to savers by paying ____________ on the deposits, and then charging interest to borrowers. • The difference between interest charged and interest paid is the bank’s ____________. • Banks also facilitate exchange by providing access to ____________. Bank depositors can write ____________ or withdraw ____________ in order to purchase goods and services.

6. Purpose of Banks • Banks transfer, directly or indirectly, from savers to ____________. • The money households do not spend is called ____________. • ____________and ____________ is what households do with money they do not spend on goods and services. • ____________provides resources to ____________to be used as investment in capital goods. • When ____________ are made to borrowers, it stimulates the nation’s economy. • ____________and ____________both obtain ____________. • ____________ are one kind of a loan. • Banks receive ____________ from savers and provide loans to borrowers. • Banks provide an incentive to savers by paying ____________ on the deposits, and then charging interest to borrowers. • The difference between interest charged and interest paid is the bank’s ____________. • Banks also facilitate exchange by providing access to ____________. Bank depositors can write ____________ or withdraw ____________ in order to purchase goods and services.

7. Purpose of Banks • Bankstransfer, directly or indirectly, from savers to borrowers. • The money households do not spend is called ____________. • ____________and ____________ is what households do with money they do not spend on goods and services. • ____________provides resources to ____________to be used as investment in capital goods. • When ____________ are made to borrowers, it stimulates the nation’s economy. • ____________and ____________both obtain ____________. • ____________ are one kind of a loan. • Banks receive ____________ from savers and provide loans to borrowers. • Banks provide an incentive to savers by paying ____________ on the deposits, and then charging interest to borrowers. • The difference between interest charged and interest paid is the bank’s ____________. • Banks also facilitate exchange by providing access to ____________. Bank depositors can write ____________ or withdraw ____________ in order to purchase goods and services.

8. Purpose of Banks • Bankstransfer, directly or indirectly, from savers to borrowers. • The money households do not spend is called savings. • ____________and ____________ is what households do with money they do not spend on goods and services. • ____________provides resources to ____________to be used as investment in capital goods. • When ____________ are made to borrowers, it stimulates the nation’s economy. • ____________and ____________both obtain ____________. • ____________ are one kind of a loan. • Banks receive ____________ from savers and provide loans to borrowers. • Banks provide an incentive to savers by paying ____________ on the deposits, and then charging interest to borrowers. • The difference between interest charged and interest paid is the bank’s ____________. • Banks also facilitate exchange by providing access to ____________. Bank depositors can write ____________ or withdraw ____________ in order to purchase goods and services.

9. Purpose of Banks • Banks transfer, directly or indirectly, from savers to borrowers. • The money households do not spend is called savings. • Saving and _______________ is what households do with money they do not spend on goods and services. • ____________provides resources to ____________to be used as investment in capital goods. • When ____________ are made to borrowers, it stimulates the nation’s economy. • ____________and ____________both obtain ____________. • ____________ are one kind of a loan. • Banks receive ____________ from savers and provide loans to borrowers. • Banks provide an incentive to savers by paying ____________ on the deposits, and then charging interest to borrowers. • The difference between interest charged and interest paid is the bank’s ____________. • Banks also facilitate exchange by providing access to ____________. Bank depositors can write ____________ or withdraw ____________ in order to purchase goods and services.

10. Purpose of Banks • Banks transfer, directly or indirectly, from savers to borrowers. • The money households do not spend is called savings. • Saving and Investingis what households do with money they do not spend on goods and services. • ____________provides resources to ____________to be used as investment in capital goods. • When ____________ are made to borrowers, it stimulates the nation’s economy. • ____________and ____________both obtain ____________. • ____________ are one kind of a loan. • Banks receive ____________ from savers and provide loans to borrowers. • Banks provide an incentive to savers by paying ____________ on the deposits, and then charging interest to borrowers. • The difference between interest charged and interest paid is the bank’s ____________. • Banks also facilitate exchange by providing access to ____________. Bank depositors can write ____________ or withdraw ____________ in order to purchase goods and services.

11. Purpose of Banks • Banks transfer, directly or indirectly, from savers to borrowers. • The money households do not spend is called savings. • Saving and Investingis what households do with money they do not spend on goods and services. • Savingsprovides resources to ____________to be used as investment in capital goods. • When ____________ are made to borrowers, it stimulates the nation’s economy. • ____________and ____________both obtain ____________. • ____________ are one kind of a loan. • Banks receive ____________ from savers and provide loans to borrowers. • Banks provide an incentive to savers by paying ____________ on the deposits, and then charging interest to borrowers. • The difference between interest charged and interest paid is the bank’s ____________. • Banks also facilitate exchange by providing access to ____________. Bank depositors can write ____________ or withdraw ____________ in order to purchase goods and services.

12. Purpose of Banks • Bankstransfer, directly or indirectly, from savers to borrowers. • The money households do not spend is called savings. • Saving and Investingis what households do with money they do not spend on goods and services. • Savingsprovides resources to Businesses to be used as investment in capital goods. • When ____________ are made to borrowers, it stimulates the nation’s economy. • ____________and ____________both obtain ____________. • ____________ are one kind of a loan. • Banks receive ____________ from savers and provide loans to borrowers. • Banks provide an incentive to savers by paying ____________ on the deposits, and then charging interest to borrowers. • The difference between interest charged and interest paid is the bank’s ____________. • Banks also facilitate exchange by providing access to ____________. Bank depositors can write ____________ or withdraw ____________ in order to purchase goods and services.

13. Purpose of Banks • Bankstransfer, directly or indirectly, from savers to borrowers. • The money households do not spend is called savings. • Saving and Investingis what households do with money they do not spend on goods and services. • Savingsprovides resources to Businesses to be used as investment in capital goods. • When loansare made to borrowers, it stimulates the nation’s economy. • ____________and ____________both obtain ____________. • ____________ are one kind of a loan. • Banks receive ____________ from savers and provide loans to borrowers. • Banks provide an incentive to savers by paying ____________ on the deposits, and then charging interest to borrowers. • The difference between interest charged and interest paid is the bank’s ____________. • Banks also facilitate exchange by providing access to ____________. Bank depositors can write ____________ or withdraw ____________ in order to purchase goods and services.

14. Purpose of Banks • Bankstransfer, directly or indirectly, from savers to borrowers. • The money households do not spend is called savings. • Saving and Investingis what households do with money they do not spend on goods and services. • Savingsprovides resources to Businesses to be used as investment in capital goods. • When loansare made to borrowers, it stimulates the nation’s economy. • Businessesand ____________both obtain ____________. • ____________ are one kind of a loan. • Banks receive ____________ from savers and provide loans to borrowers. • Banks provide an incentive to savers by paying ____________ on the deposits, and then charging interest to borrowers. • The difference between interest charged and interest paid is the bank’s ____________. • Banks also facilitate exchange by providing access to ____________. Bank depositors can write ____________ or withdraw ____________ in order to purchase goods and services.

15. Purpose of Banks • Bankstransfer, directly or indirectly, from savers to borrowers. • The money households do not spend is called savings. • Saving and Investingis what households do with money they do not spend on goods and services. • Savingsprovides resources to Businesses to be used as investment in capital goods. • When loansare made to borrowers, it stimulates the nation’s economy. • Businessesand consumersboth obtain ____________. • ____________ are one kind of a loan. • Banks receive ____________ from savers and provide loans to borrowers. • Banks provide an incentive to savers by paying ____________ on the deposits, and then charging interest to borrowers. • The difference between interest charged and interest paid is the bank’s ____________. • Banks also facilitate exchange by providing access to ____________. Bank depositors can write ____________ or withdraw ____________ in order to purchase goods and services.

16. Purpose of Banks • Banks transfer, directly or indirectly, from savers to borrowers. • The money households do not spend is called savings. • Saving and Investingis what households do with money they do not spend on goods and services. • Savingsprovides resources to businesses to be used as investment in capital goods. • When loans are made to borrowers, it stimulates the nation’s economy. • Businessesand consumers (households) both obtain loans. • ____________ are one kind of a loan. • Banks receive ____________ from savers and provide loans to borrowers. • Banks provide an incentive to savers by paying ____________ on the deposits, and then charging interest to borrowers. • The difference between interest charged and interest paid is the bank’s ____________. • Banks also facilitate exchange by providing access to ____________. Bank depositors can write ____________ or withdraw ____________ in order to purchase goods and services.

17. Purpose of Banks • Banks transfer, directly or indirectly, from savers to borrowers. • The money households do not spend is called savings. • Saving and Investingis what households do with money they do not spend on goods and services. • Savingsprovides resources to businesses to be used as investment in capital goods. • When loans are made to borrowers, it stimulates the nation’s economy. • Businessesand consumers (households) both obtain loans. • Mortgages are one kind of a loan. • Banks receive ____________ from savers and provide loans to borrowers. • Banks provide an incentive to savers by paying ____________ on the deposits, and then charging interest to borrowers. • The difference between interest charged and interest paid is the bank’s ____________. • Banks also facilitate exchange by providing access to ____________. Bank depositors can write ____________ or withdraw ____________ in order to purchase goods and services.

18. Purpose of Banks • Banks transfer, directly or indirectly, from savers to borrowers. • The money households do not spend is called savings. • Saving and Investingis what households do with money they do not spend on goods and services. • Savingsprovides resources to businesses to be used as investment in capital goods. • When loans are made to borrowers, it stimulates the nation’s economy. • Businessesand consumers (households) both obtain loans. • Mortgages are one kind of a loan. • Banks receive depositsfrom savers and provide loans to borrowers. • Banks provide an incentive to savers by paying ____________ on the deposits, and then charging interest to borrowers. • The difference between interest charged and interest paid is the bank’s ____________. • Banks also facilitate exchange by providing access to ____________. Bank depositors can write ____________ or withdraw ____________ in order to purchase goods and services.

19. Purpose of Banks • Banks transfer, directly or indirectly, from savers to borrowers. • The money households do not spend is called savings. • Saving and Investingis what households do with money they do not spend on goods and services. • Savingsprovides resources to businesses to be used as investment in capital goods. • When loans are made to borrowers, it stimulates the nation’s economy. • Businessesand consumers (households) both obtain loans. • Mortgages are one kind of a loan. • Banks receive depositsfrom savers and provide loans to borrowers. • Banks provide an incentive to savers by paying interest on the deposits, and then charging interest to borrowers. • The difference between interest charged and interest paid is the bank’s ____________. • Banks also facilitate exchange by providing access to ____________. Bank depositors can write ____________ or withdraw ____________ in order to purchase goods and services.

20. Purpose of Banks • Banks transfer, directly or indirectly, from savers to borrowers. • The money households do not spend is called savings. • Saving and Investingis what households do with money they do not spend on goods and services. • Savingsprovides resources to businesses to be used as investment in capital goods. • When loans are made to borrowers, it stimulates the nation’s economy. • Businessesand consumers (households) both obtain loans. • Mortgages are one kind of a loan. • Banks receive depositsfrom savers and provide loans to borrowers. • Banks provide an incentive to savers by paying interest on the deposits, and then charging interest to borrowers. • The difference between interest charged and interest paid is the bank’s profits. • Banks also facilitate exchange by providing access to ____________. Bank depositors can write ____________ or withdraw ____________ in order to purchase goods and services.

21. Purpose of Banks • Banks transfer, directly or indirectly, from savers to borrowers. • The money households do not spend is called savings. • Saving and Investingis what households do with money they do not spend on goods and services. • Savingsprovides resources to businesses to be used as investment in capital goods. • When loans are made to borrowers, it stimulates the nation’s economy. • Businessesand consumers (households) both obtain loans. • Mortgages are one kind of a loan. • Banks receive depositsfrom savers and provide loans to borrowers. • Banks provide an incentive to savers by paying interest on the deposits, and then charging interest to borrowers. • The difference between interest charged and interest paid is the bank’s profits. • Banks also facilitate exchange by providing access to money. Bank depositors can write ____________ or withdraw ____________ in order to purchase goods and services.

22. Purpose of Banks • Banks transfer, directly or indirectly, from savers to borrowers. • The money households do not spend is called savings. • Saving and Investingis what households do with money they do not spend on goods and services. • Savingsprovides resources to businesses to be used as investment in capital goods. • When loans are made to borrowers, it stimulates the nation’s economy. • Businessesand consumers (households) both obtain loans. • Mortgages are one kind of a loan. • Banks receive depositsfrom savers and provide loans to borrowers. • Banks provide an incentive to savers by paying interest on the deposits, and then charging interest to borrowers. • The difference between interest charged and interest paid is the bank’s profits. • Banks also facilitate exchange by providing access to money. Bank depositors can write checksor withdraw ____________ in order to purchase goods and services.

23. Purpose of Banks • Banks transfer, directly or indirectly, from savers to borrowers. • The money households do not spend is called savings. • Saving and Investingis what households do with money they do not spend on goods and services. • Savingsprovides resources to businesses to be used as investment in capital goods. • When loans are made to borrowers, it stimulates the nation’s economy. • Businessesand consumers (households) both obtain loans. • Mortgages are one kind of a loan. • Banks receive depositsfrom savers and provide loans to borrowers. • Banks provide an incentive to savers by paying interest on the deposits, and then charging interest to borrowers. • The difference between interest charged and interest paid is the bank’s profits. • Banks also facilitate exchange by providing access to money. Bank depositors can write checksor withdraw cashin order to purchase goods and services.

24. Purpose of Banks • Banks transfer funds, directly or indirectly, from savers to borrowers. • The money households do not spend is called savings. • Saving and investing is what households do with money they do not spend on goods and services. • Saving provides resources to businesses to be used as investment in capital goods. • When loans are made to borrowers, it stimulates the nation’s economy. • Businesses and consumers both obtain loans. • Mortgages are one kind of a loan. • Banks receive deposits from savers and provide loans to borrowers. • Banks provide an incentive to savers by paying interest on the deposits, and then charging interest to borrowers. • The difference between interest charged and interest paid is the bank’s profit. • Banks also facilitate exchange by providing access to money. Bank depositors can write checks or withdraw cash in order to purchase goods and services.

25. Vocabulary • Reasons for Banks • Vocabulary and Definitions • Bank – Businesses that accept people’s deposits of money in checking and savings accounts and make loans to people who want to borrow money • Borrowing – Using money or things that belong to another person with the understanding that the things will be returned or the money repaid. • Deposit – Money put into a financial account. Also, to place money in a financial account. • Economy – Activities related to the production and distribution of goods and services in a particular geographic region. • Income – Money people earn for work.

26. Interdependence – A situation in which decisions made by one person affect decisions made by other people, or events in one part of the world or sector of the economy affect other parts of the world or other sectors of the economy. • Interest – Money people receive for allowing the bank or someone else to use their money. Interest can also mean the fee a borrower pays for a loan. • Interest Rate – The price of money that is borrowed or saved. • Lender – Someone who lends another person money, usually a bank, or things and expects to have the money repaid or the item returned. • Loan – An arrangement in which a lender gives money or property to a borrower and the borrower agrees to return the property or repay the money, usually with interest, at some future point in time. • Saving – Income not spent on goods and services; this money is set aside to spend later. • Spending – Buying goods and services.