Characteristics of Money
Name the 6 characteristics of currency.
What are the two types of interest we learned about?
What are simple and compound interest?
What is inflation?
Inflation is the gradual increase in price of everyday goods over a long period of time.
What is a saver?
Someone who places money into the bank for later
Describe how a high scarcity influences the value of a currency.
What is the higher the scarcity, the higher the value?
What is compound interest?
Compound interest adds interest to the principal value to calculate any interest in the future.
What causes inflation?
Changes in demand or supply (cost-push and demand-pull inflation)
Someone who takes out loans from a bank
Why is it important for currency to be divisible?
It allows people to buy any quantity/size of a good/service.
What is simple interest?
Simple interest is simply calculated from the principal amount. The amount of previously accrued interest has no influence over future interest.
What is the preferred inflation rate according to FED officials?
What is 2%?
How are borrowers and savers connected?
The money that savers put into banks are used by the banks to give out loans to borrowers. The interest that borrowers pay is reinvested into the savers' accounts as incentives to continue placing money into the bank.