ice advance as the meres i char operate a small computer repair serv company. Yo
ID: 1145046 • Letter: I
Question
ice advance as the meres i char operate a small computer repair serv company. You need $5,000 to buy some deposits the remainder,ng equipment in order to service the lat- ation of computers. Because you do not have the money yourself, you apply loan.It your checking account at the ha ing the interest on a loan i known as discountin for a loan. After you receive the I you You meet with a loan officer to explain the new equipment. This starts why you need this money. You bring in busi events into action. You ness records that show that you have been ter service to your customers, whick making a profit. You might also bring finan- help you make more money. The cial analyses, called projections, that esti- makes money on the loa T mate how your business will improve with company uses the money it go the added equipment. In addition, you want and other customers to pay its to convince the loan officer that you will be and suppliers. Perhaps it· cano c rom y even be able to repay the loan. So you also point out to expand its business as vel. In th that you have no other debts except for a car your loan and other forms of cr loan, which you have always paid on time. throughout the U.S. economy The loan officer needs the approval of the bank's lending committee for larger loans. She does, however, have the author- ity to approve smaller loans like yours on READING CHECK Identifying Cause and What factors might cause a uankto agret. moneyi nline Qu SECTION 2 ASSESSMENT Reviewing Ideas and Terms 1. Explain How did the first banks originate? Critical Thinking 5. Summarizing Use your notes and a chart like te 2. a. Define Write a brief definition for the terms one here to summarize the different types of banks that operate in the United States collateral, savings and loan associations, and credit unions. b. Compare and Contrast What is the differ- ence between a demand deposit account and a time deposit account? Commercial Banks Banks 3. a. Define Write a brief definition for the terms Federal Reserve System and discount rate. b. Identifying Cause and Effect Why did the Focus on Writing US. government decide to regulate banks, and how 6. Summarizing Imagine that you are an economic did it do this? professor teaching a course to future bankers Wite 4. a. Define Write a brief definition for the term discounting. b. Analyze Information How do business loans a brief lesson explaining the purpose of the Fedea Reserve banks. help the U.S. economy grow? 516 CHAPTER 19Explanation / Answer
1. Origins of banking.
Banking was born because of the need for keeping money safe. People were attacked by thieves, so they started giving it to the local goldsmiths for safe keeping. The goldsmiths kept the money in safes and charged interest. Thus, was born the banking system.
2b. The difference between demand deposit and time deposit.
A demand deposit has to be paid to the customer on demand. A time deposit should be kept with the bank for a certain period of time.
3b. Why did the U.S. Government decide to regulate banks and how did it do this?
The Federal Reserve System was created to prevent bank failures by requiring banks to keep a certain amount of reserves with the Federal Reserve Bank. Banks failed because they may not have enough funds available if lot of people withdrew the deposits and the same time.
4b.Loans help in creating more money supply and helping the economy grow.
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