2nd Quarter Exam - Banking Services and Methods of Saving

Front

How does the Federal Reserve's monetary policy impact the growth of retirement savings and financial accounts in the U.S. economy?

Back

By adjusting interest rates, the Fed can influence the cost of borrowing, which indirectly affects retirement savings and financial accounts.

Front

The benefits and drawbacks of using a 401(k) plan versus an IRA for retirement savings are:

Back

401(k) plans offer higher contribution limits but may have limited investment options compared to IRAs.

Front

How do retirement savings plans like 401(k) and 403(b) contribute to a secure financial future after retirement?

Back

They provide tax benefits and possible employer matches, which are essential for a secure retirement.

Front

What is the primary distinction between depository and nondepository financial institutions in terms of their services for retirement planning?

Back

Depository institutions manage savings and checking accounts, whereas nondepository institutions specialize in investment and insurance products for retirement.

Front

Discuss the pros and cons of choosing Certificates of Deposit (CDs) for retirement savings plans.

Back

CDs provide a higher interest rate compared to savings accounts but require funds to be locked in for a set period.

Front

What are the benefits of investing in Individual Retirement Accounts (IRAs) for retirement planning?

Back

IRAs provide tax advantages and flexibility, making them a strategic tool for retirement savings.

Front

How does the liquidity of retirement savings accounts and financial accounts impact their role in personal financial planning?

Back

High liquidity allows for easy access to funds for daily expenses, but these accounts usually offer lower interest rates.

Front

Why might someone choose to use a retirement savings account at a financial institution?

Back

Because retirement savings accounts provide high security for financial assets, though they may have limited access hours.

Front

How do employer-sponsored retirement accounts like 401(k) and 403(b) contribute to financial security?

Back

Employer-sponsored plans offer tax benefits and potential employer matching, making them crucial for financial security.

Front

What effect do changes in Federal Reserve interest rates have on consumer behavior towards saving and spending?

Back

Higher interest rates lead to increased savings and reduced consumer spending.