ECO 1001 Lecture Notes - Lecture 9: Transaction Account, Savings Account, Gie
27 Oct 2016
School
Department
Course
Professor
Document Summary
Centuries ago lending was considered unethical and thus was not allowed: people believed that in lending the rich would exploit the poor. Lending mostly occurred at fairs because many people came together in a common area. I(cid:374)terest a(cid:374)d le(cid:374)di(cid:374)g (cid:271)e(cid:272)a(cid:373)e (cid:373)ore a(cid:272)(cid:272)epta(cid:271)le (cid:271)e(cid:272)ause of late pa(cid:455)(cid:373)e(cid:374)ts that (cid:449)ere(cid:374)"t (cid:271)ei(cid:374)g made and because of opportunity costs. Banks are required to keep a certain amount of money in the vaults (on reserve) Banks reserves are checked every 2nd wednesday to confirm that the requirements are met. Reserves are greater for checking accounts because people take money out of checking accounts (by paying with checks and debit cards) more often than people take money out of other accounts (such as saving accounts) Banks accounts are insured up to 250k by the fdic. This insurance encourages people to put their money in the banks because there is less risk of losing their money.
