Your reflection should be at least three sentences
Identify characteristics of money and analyze sources of money’s value.
Determine the shifts between centralized and decentralized banking before the Civil War and describe the stabilization of the banking system during the late 1800s.
Identify developments in banking during the twentieth century and explain functions of different types of financial institutions.
Identify the trade-offs among risk, liquidity, and return and analyze how investing contributes to the free enterprise system.
Describe the characteristics of bonds and financial assets.
Identify the connections between capital, stock markets, banks, and the economy to explain how financial markets channel funds from savers to investors
Money has various characteristics such as divisibility, durability, portability, and uniformity, which make it a widely accepted medium of exchange. The value of money is derived from its role as a medium of exchange, unit of account, and store of value, as well as from the trust people have in the issuing authority.
Before the Civil War, banking in the United States was primarily decentralized, with numerous state-chartered banks issuing their own currency. However, the instability and lack of regulation in the banking system led to frequent bank failures and economic crises. In the late 1800s, the National Banking Act was passed to establish a national banking system and create a more stable financial environment.
During the twentieth century, developments in banking included the rise of commercial banks, savings and loan associations, credit unions, and investment banks. These financial institutions serve different functions such as providing loans, accepting deposits, facilitating investments, and managing risks to support economic growth.
Investing in financial markets involves trade-offs among risk, liquidity, and return. By balancing these factors, investors can contribute to the free enterprise system by allocating capital to businesses and industries that drive economic growth and innovation.
Bonds are fixed-income securities issued by governments, corporations, or other entities to raise capital. Financial assets include stocks, bonds, commodities, and derivatives that can be traded in financial markets. These assets play a crucial role in connecting savers with investors through the banking system and stock markets, channeling funds to support economic activities and growth.