Bank Deposits Help The Nation'S Economy By

How do central banks govern the banking industry? Check all that apply.

by deciding how much banks must keep in reserve
by overseeing the nation's payment system
by supervising the loan process at banks
by printing money for distribution to banks
by responding quickly to banking crises that occur
by auditing banks based on current regulations

By deciding how much banks must keep in reserve
By overseeing the nation's payment system
By responding quickly to banking crises that occur
By auditing banks based on current regulations

This diagram shows how banking in the financial sector fits into the circular flow model.

Based on the diagram, which example describes how a bank injects money into the economy?

A bank opens a savings account for a customer.
A bank approves a mortgage for a customer.
A bank buys a company's rapidly growing stock.
A bank buys property in a bustling business district.

A bank approves a mortgage for a customer.

Banks pay interest to customers through a:

savings account.
credit card account.
mortgage account.
401k account.

Savings account

Which are the roles of a bank? Check all that apply.

Storing and holding money
Making purchases to create profits
Lending money
Investing in the economy
Creating money for the economy

Storing and holding money
Lending money
Investing in the economy

Read the graph that displays mortgage interest rates between 1978 and 1983.

In what year did consumers get the best deal on a mortgage?

1978
1980
1982
1983

1978

An entrepreneur who needs money to create and distribute a new invention would most likely visit:

a community banker.
an investment banker.
a commercial banker.
an executive banker.

An investment banker

Bank deposits help the nation's economy by:

providing protection for consumers from theft.
giving banks the money to loan and invest.
providing protection for banks on investments.
giving consumers the ability to save money.

Giving banks the money to loan and invest.

Which statement best describes the effects of low and high interest rates on the economy?

Low interest rates encourage consumers to borrow and spend, while high interest rates encourage saving.
High interest rates discourage consumers from investing, while low interest rates encourage investment.
High interest rates encourage consumers to borrow and spend, while low interest rates encourage saving.
Low interest rates encourage consumers to invest, while high interest rates discourage investment.

Low interest rates encourage consumers to borrow and spend, while high interest rates encourage saving.

Read the graph that displays interest and total payments on a loan.

Banks make the most money and take the most risk with an interest rate of:

5 percent.
10 percent.
15 percent
18 percent.

18 percent

What explains the difference between retail and commercial banking?

Commercial banks loan money to small businesses, while retail banks loan money to large corporations.
Retail banks loan money to small businesses, while commercial banks loan money to large corporations.
Commercial banks help small businesses make capital purchases, while retail banks help big businesses invest.
Retail banks help big businesses make capital purchases, while commercial banks help consumers invest.

Retail banks loan money to small businesses, while commercial banks loan money to large corporations.

An entrepreneur who needs large amounts of capital to create and distribute a new invention would most likely visit:

a community banker.
an investment banker.
a commercial banker.
an executive banker.

An investment banker.

The Federal Reserve Bank of the United States is also known as the:

people's bank.
central bank.
world bank.
retail bank.

Central bank.

Which is the correct order of entities who benefit when banks make a profit?

employees, shareholders, and the economy
shareholders, shoppers, and the economy
employees, companies, and the economy
shareholders, companies, and the economy

Shareholders, companies, and the economy

Which best explains why banks consider interest on loans to be important?

Interest enables them to control the economy.
Interest helps them to satisfy customers.
Interest enables them to stockpile money.
Interest helps them cover business costs.

Interest helps them cover business costs.

Which example best describes how a bank injects money into the economy?

A bank opens a savings account for a customer.
A bank approves a mortgage for a customer.
A bank buys a company's rapidly growing stock.
A bank buys property in a bustling business district.

A bank approves a mortgage for a customer.

Read the graph about mortgage interest rates and housing starts between 1978 and 1983.

A conclusion that can be drawn from both graphs by looking at 1983 is that interest rates:

dropped, which led to more home starts.
peaked, while home starts bottomed out.
climbed, which led to fewer home starts.
bottomed out, while home starts peaked.

Dropped, which led to more home starts