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Consumers & Savers
A consumer is anyone who buys
goods or services for personal
use. Consumer spending is the
biggest component of total
spending in the U.S. economy.
Sources of Income
from work – wages, salary
 Income from wealth – interest, capital
How can you accumulate wealth? Save.
How much people save depends on their
income, their expectations, interest rates,
& tax laws.
 Income
Create a budget: set financial goals, estimate
income, estimate expenditures.
 Factors to consider: safety, rate of return,
 Where people put their savings: savings
accounts, certificates of deposit, money market,
pension funds, corporate stocks, U.S. savings
bonds, other government securities, mutual
funds, corporate bonds, real estate, insurance.
Consumer Credit
Consumer credit enables you to enjoy goods &
services before you pay for them fully.
 There are two strings attached to every credit
purchase: you must repay the principal (the
amount borrowed) & interest plus other costs.
 Consumer credit is either loan credit (borrow
money to finance a purchase) or sales credit
(buy goods & services now & pay for them
 Kinds of credit: home mortgages, auto &
consumer loans, charge accounts, credit cards.
Terms to know
Stocks – represent ownership in a business
 Bonds – are certificates of a corporation’s or the
government’s indebtedness to the holder – a
loan to be repaid with interest.
 Dow Jones Industrial Average – one of several
indices that serves as a pulse on the market
 The SEC – Securities & Exchange Commission
is a federal agency responsible for protecting
investors in the sale of securities
can be anything that is generally accepted in
payment for goods & services
Money plays three roles: it serves as a medium
of exchange, a store of value, & a measure of
 Money, as a practical matter, should have the
following qualities:
The Federal Reserve System
is the nation’s banking system
 It
is responsible for issuing paper currency,
regulating the quantity of money in
circulation, & with other agencies,
supervising commercial banks.
 It consists of 12 District Banks, a Board of
Governors, the Federal Open Market
Committee, & three advisory councils.