F1.5 Describe trading, lending, borrowing, and donating as different ways to distribute financial and other resources among individuals and organizations.
Skill: Understanding Financial Exchanges in Society
Money in a society flows between institutions and individuals. In Grade 6, student should be able to describe concepts such as trading, lending, borrowing, and giving, and to explain the ways in which different financial resources can be distributed among several institutions.
The following is a list of questions that students could be asked to learn more about financial exchanges between businesses, individuals, financial institutions and organizations:
- Why would a company need to borrow money from a financial institution?
- When might trading be used as a way of distributing resources between individuals? What are some expenses that a business may have?
- How could a decrease in lending by banking institutions decrease the income of businesses and charities?
- How could time be a resource that is donated to an individual or organization?
Financial resources are not the only resources that can be distributed and exchanged. Goods, services and time can be used by individuals in society.
Knowledge: Business (Trading)
Establishments or stores responsible for selling or reselling various goods.
Knowledge: Borrowing
The act of accessing a sum of money that is to be repaid, often with interest.
Borrowing allows individuals or businesses who may not have been able to save a specific amount of money to have quick access to that money.
Examples of Use
- Individuals: buying a house, buying a car, renovations, etc.
- Business: growing the business, starting a business, purchasing fixed assets, etc.
Knowledge: Donation
The act of giving money, service or time to a person or business without requiring anything in return, allowing donors to help people or businesses in need. In addition, from a tax perspective, donations may be tax deductible in some cases. An individual or business may donate time, services or money to a charity.
Knowledge: Lending
The act of lending money to an individual or business, usually with interest. Businesses and individuals lend money to earn interest on the principal.