1 Explain How did the first banks originate 5 Summarizing Us

1. Explain How did the first banks originate? 5. Summarizing Use your notes and a chart lile 2. a. Define Write a brief definition for the terms one here to summarize the different types of barie that operate in the United States collateral, savings and loan associations, and credit unions b. Compare and Contrast What is the differ- ence between a demand deposit account and a time deposit account? Savings and Loans Banks 3. a. Define Write a brief definition for the terms Federal Reserve System and discount rate. b. Identifying Cause and Effect Why did the US government decide to regulate banks, and how did it do this? Focus on Writing 6.Summarizing Imagine that you are an professor teaching a course to future bankers W a brief lesson explaining the purpose of the Reserve banks 4. a. Define Write a brief definition for the term discounting b. Analyze Information How do business loans help the US. economy grow? 516 CHAPTER 19

Solution

4.B

The bank and financial institutions issue business loans to the firms that help them in capital formation, expand the existing business or start a new business. It builds capacity to the firms to cater the demand not only at the domestic level, but also the overseas demand. It creates an increase in output and GDP growth. While doing so, the firms require new labor, raw materials and other input factors of production. As a result, new employment opportunities as well as the derived demand for other goods are created. An increase in earnings by the household sector, further increase the demand. So, a chain of positive activities is initiated in the U.S. economy and the economy grows.

5.

Commercial Bank

Savings & Loans

Savings bank

Credit Unions

It deals with the business customers. It issues business loans and other type of credit to the firms. The monetary policy manipulates interest rates to help bank control the lending process.

It takes savings from one person and issues loans to the another person, preferable home loans.

It deals with the retail consumers and accepts deposits and issues loans. It is also termed as retail bank.

Such type of banks is cooperative in nature, where the credit union is owned by their own customers. These customers share the some of the common characteristics such as location and or occupation.

Commercial Bank	Savings & Loans	Savings bank	Credit Unions
It deals with the business customers. It issues business loans and other type of credit to the firms. The monetary policy manipulates interest rates to help bank control the lending process.	It takes savings from one person and issues loans to the another person, preferable home loans.	It deals with the retail consumers and accepts deposits and issues loans. It is also termed as retail bank.	Such type of banks is cooperative in nature, where the credit union is owned by their own customers. These customers share the some of the common characteristics such as location and or occupation.