How money moves through the economy

AngieMaybe you’ve heard the expression “money makes the world go ’round”? Well, that pretty much describes the way money moves in society — sort of in a circle.

Stack of money circling the Earth

AngieCheck this out: Money gets to the bank from lots of sources. First, we know it starts at the Treasury, which keeps banks supplied with the money they need for their customers.

But then there’s also money that’s already in the economy — you know money from other sources, such as individuals and businesses. That money also goes to banks. So you see how money gets to the bank, leaves the bank, goes through the economy, and then returns again to the bank. Money recycles!

Stack of money moving from a bank to individuals and businesses, and then back to the bank

AngieLet’s say your grandmother gives you $20 for your birthday, and you decide to keep it safe at the bank, in an account. The bank then pays you to keep your money in that account. It’s called interest. It’s like getting something for nothing! We’ll explore the wonderful world of interest and savings accounts later. For now, let’s look at what happens with the money in your account.

Click the Next button to learn about what happens with the money in your account.