Financial institutions 4/13

The government issues coins and currency to make the exchange of goods and services easy. People accept U.S. coins and currency in exchange for goods and services because they have:

• No other choice

• Confidence in the U.S. government

• Been taught that this is the law and the only way to do it

• No way to regulate "barter and trade"

Which of the following are intermediaries between people who save money and people who borrow money?

• Political candidates

• Government officials

• Banks, credit unions, financial institutions

• Schools or colleges

All of the following are characteristics of financial institutions EXCEPT:

• Belong to all citizens

• Include banks savings and loans, and credit unions

• Encourage savings and investing by paying interest

• Receive deposits and make loans

The attached pictures are all examples of...

• Coins

• Federal Reserve Notes

• Legal contracts

• Government issued checks

Why does the U.S. government issue coins and currency?

• So it can be wealthy

• To maintain control of the U.S. mints

• To make the buying goods and services easy

• To display the portraits of great former presidents

What is interest?

• Something you do not have in economics

• The money corporations pay to their stockholders

• To set aside income for a period of time so that it can be used later

• The payment people receive when they lend their money or allow someone else to use their money

Financial institutions act as intermediaries between borrowers and savers by receiving deposits and making loans. Financial institutions encourage saving by paying _____ on deposits.

• Interest

• Loans

• Dividends

• Savings

Private financial institutions include (check ALL that apply):

• Federal Reserve

• Savings & Loans

• Credit Unions

• Loans "R" Us

• Banks

Who pays interest on a loan

• a lender
•  a borrower
• a credit union
• a creditor

A credit union...

• is a financial institution that focuses on taking deposits and using them to fund mortgages.
• is a non-profit institution owned by its members and provides financial services to its members.
• offers a broad range of deposit account and gives loans to individuals and businesses. 
• is a financial institution for students only