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Transcript
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
gains
How can you accumulate wealth? Save.
How much people save depends on their
income, their expectations, interest rates,
& tax laws.
 Income
Saving

Create a budget: set financial goals, estimate
income, estimate expenditures.
 Factors to consider: safety, rate of return,
liquidity.
 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
later).
 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

Money
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
prices.
 Money, as a practical matter, should have the
following qualities:
Stability
Portability
Durability
Uniformity
Divisibility
Recognizability
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.