Money - Insurance - Credit. Economics 4 th ESO Teacher: Alberto Pérez

Transcription

1 Money - Insurance - Credit Economics 4 th ESO Teacher: Alberto Pérez

2 BUSINESS Money & LEADERSHIP The evolution of money Types of money Qualities and functions of money Fiduciary money Financial money: CEB

3 Definition and history of money Something generally accepted as a medium of exchange, a measure of value, or a means of payment. Before... Exchange = 2 people exchange their goods if they get a deal (barter) (They have to have the same needs= coincidence of wants) 2 conditions: - Measure of payment - Accepted by everyone Money types Commodity - money Salt,cows,stones,metals... Fiat or fiduciary money Coins and notes. History of the money:

4 Qualities of the money Easy to transport Divisable Durable Functions of the money Medium of payment Value deposit (be aware of inflation) Unity of counting and payments (express the price of goods and services)

5 ACTIVITY History of MONEY. 1. Definition of money. 2. Draw and paint a short comic of 6 to 10 panels that explains a story about the begining of trade until the fiat money that we use nowadays. 3. Explain it to the teacher. Be creative!!!

6 . Fiduciary money There is no real value of money, it is the acceptance and trust that makes it valuable. The increase in quantity of money drives (short and medium term) the increase in economic activity. However, in the long term this increase reflects directly on prices. - Central banks can create as much money as they think is necessary for the economy. Unfortunetly, in the long term it drives inflation (prices increasing) but to keep this in control the central banks have to keep prices lower than 2%. - It is important to the trust the system to avoid uncertainty and negative consequences. How much money exists in the economy??? Monetary offer: M1 (knots, coins and accounts) + M2 (M1 + deposits until 2 years & liquid deposits 3 months) + M3 ( M2 + shares & funds).

7 Financial money. - People put their real money into a bank for different reasons (current accounts). Banks provide a lot of facilities such as credit and debit cards to ensure customers do not take cash money out of the bank. Why are banks doing this??? Imagine that Albert put euros in his current account. The bank lends this money to Carlos who needs it (by law, the bank has to reserve 1%). Carlos then uses it to buy a computer for Aina, Aina then puts 990 euros into her bank account to keep it safe. The bank can now lend 980,10 euros to someone else and so on and so on... Total bank money generated = ,10 = 2.970,10 That is the mecanism to multiply the money How CEB can control the total amount of money??? M= (e + 1) / (e + Ɵ) x BM e= coeficiente efectivo de la eurozona BM= base monetaria Ɵ= coeficiente de reserva

8 Financial and insurance contracts Current accounts Security Concept and elements of the insurance Types of insurance

9 Current account and security It is a contract between a person and a bank where the person can put and withdraw money to manage his daily payments (transfers, payslips, cash). There are 2 types of cards: - Debit card: You are using the amount of money you have in your account to buy things and withdraw money. - Credit card: The bank gives you a limited credit to spend until the end of the month when you have to pay it back, otherwise you will be charged a high interest rate(estar en descubierto = nº rojos). Security advice: - Do not open and answer s about bank information (phishing s). - Always use official sites to be protected from computer viruses. - Do not save your password when you get into your account. - Always memorise you card PIN, never write it down and do not put your birthday or something obvious. - Use prepaid cards to improve security when buying online.

10 Insurance contract In everyday activities unexpected events can happen. To minimize them we have insurance cover which comes as an insurance contract: An insurance contract is an arrangement in which one party, the insurer, accepts significant insurance risk from another party, the policyholder, to compensate the policyholder if a specific uncertain future event impacts the policyholder. Insurer (asegurador): right to recieve periodically an amount of money called a premium. If the event (insured) occures, insurer has to pay the insured person what was agreed in the contract. Insured (asegurado): right to recieve the compensation if the event which is insured occures. Insured person has to pay periodically to the insurer the premium. Event: is likely to occur and has bad consequences to the insured person. Policyholder (tenedor): The person who is under the insurance contract and has to pay the premium. Premium (prima): amount of money that the insured person gives to the insurer monthly, annualy, etc.

11 Types of insurances - Fire, robbery, transport, credit, economic, civil responsibility, legal defense. - Life, accidents, health and health assistance or disability.

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