Financial Institutions and Credit

The primary function of banks in the United States is to

• print money.

• make banking laws.

• build homes and businesses.

• provide checking and savings accounts to customers.

Which financial service is LEAST LIKELY to be offered by a credit union?

• trust accounts

• savings accounts

• automobile loans

• certificates of deposit

Why would banks offer higher interest rates for savings and checking accounts?

• To encourage people to spend money in the economy.

• To discourage people to spend money in the economy.

• To encourage people to put money in savings and checking accounts.

• To discourage people to put money in savings and checking accounts.

Why is there a difference between interest charged and interest earned?

• Banks are non-profit institutions.

• Banks are profit-making institutions.

• Banks must pay more than they receive.

• There is no difference between interest charged and interest earned.

Why are credit unions typically able to offer higher interst rates to savers and lower rates to borrowers than commercial banks?

• Credit unions are not-for-profit.

• Credit unions are federaly funded to insure they pay more and charge less.

• Credit unions are required by law to pay different rates than commercial banks.

• Credit unions charge very high membership fees to make up for the other losses.

A receipt showing that an investor has made an interest-bearing loan to a bank is a

• 401k

• pension.

• savings account.

• certificate of deposit.

Homer wants to borrow money from the Springfield Bank to buy a new trampoline. The bank requires collateral for a loan. What is collateral?

• a signed statement that the loan will be repaid

• an increased interest rate for a high risk loan

• something of value which the bank will receive if the loan is not repaid

• money deposited in the bank which is greater than the amount of the loan

What type of information is NOT found on a consumer's credit report?

• bankruptcies or tax liens

• employment history

• current and past addresses

• personal medical information

While credit is all or part of an amount a borrower may use, debt is

• the amount of credit that is used.

• repaid before credit is extended.

• the unused portion of credit.

• added to the credit amount.

Which of these is the BEST example of debt?

• A person buys a new car.

• A person pays interest on a mortgage.

• A person deposits a paycheck into a savings account.

• A person withdraws money from a bank account using an ATM card.