Banking Basics

What do banks do?

• Give you a place to keep your money

• Loan money to people and businesses

• Invest in businesses

• Pay you money

What is "interest"?

• Extra money you pay when paying back a loan

• A rating you receive to determine how likely you are to pay back a loan

• What banks use to decide how much they want your business

• Another term for the money that is in your banking account

Banks make money by:

• Charging interest

• Adding fees for services

• Making investments

• Donating to charities

What kind of bank do people like you, me, small businesses, etc. use?

• Central Bank

• Commercial Bank

• Investment Bank

• Private Bank

How is a savings account different from a Money Market Account/ Certificate of Deposit (CD)?

• Savings Accounts gain more interest

• Savings accounts can't be touched/withdrawn for long periods of time

• Money Market Accounts/ CDs are high risk but pay off large amounts of money

• Savings accounts can be withdrawn or transferred to other accounts easily without penalty

What is the name of the central bank the U.S. Government uses?

• The Treasury

• The United States Bank

• The NYSE

• The Federal Reserve

What's the difference between stocks and bonds?

• Stocks pay back money with interest

• Bonds give you ownership in a business

• Stocks give you ownership in a business

• Bonds pay back money with interest

What is a bank run? (also known as a run on the banks)

• When a bank is giving out lots of loans at low interest rates

• When lots of people/ businesses are depositing large sums of money

• When a bank stop loaning out money

• When lots of people/businesses are withdrawing their money from the bank

What happens if a government prints more currency during hard economic times?

• It keeps more money circulating so people can buy stuff

• It just gets put into savings accounts so it doesn't do much

• It causes inflation of prices and the money doesn't buy as much

• It just adds to the national debt

You can go to jail for not paying back consumer debt.

• True

• False