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10 Cards in this Set
- Front
- Back
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3 Functions of Money |
Means of Exchange: eliminates the need for bartering and the need for coincidence of wants Store of Purchasing Power: will not lose its power over time like milk or eggs could Measure of Value: everyone knows what it's worth so it makes buying goods easier than bartering |
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Deposit Takers |
Banks and credit unions who take money from savers |
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Chartered Bank |
Deposit Takers who are allowed by the government to provide financial services -they cannot lend out all the money, money must be kept in the banks so their customers can withdraw money when needed |
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The Canadian Financial System |
-Near banks, credit unions, Trust companies and mortgage companies are more specialized but all take deposits from individuals -Canadian banks are very stable because the government limits the number of players and what services they can provide. We have been left with 6 major banks -The chance of people losing their deposits is 0. The Canadian government insures all deposits up to $100000 |
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The Money Supply |
-Currency, paper and coin, it is convenient and universally accepted and provides anonymity -Deposits, the longer they are kept in the bank, the higher the interest rate |
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Term Deposits |
Money can be withdrawn after 1,3, or 5 years. The longer the term the higher the interest rate. |
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Credit Card |
-A way of instantly borrowing money with no interest if paid back within a prescribed period -Only given to clients who have a good credit rating. This is an expensive way of borrowing money if you dont pay back the loan on time |
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Debit Card |
-Allows for payment of goods by an instantaneous transfer of funds -Given to almost everyone that wants them |
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The Money Market |
The government always takes into account the amount of money in the banks. This is because of the Money Multiplier Effect |
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Reserve Ratio |
-The amount of money the banks keep on hand to satisfy the needs of their customers -Used to be 10%, now it is up to the banks to determine how much money to keep on hand |
