Honors Economics - Banking

What is the purpose of a bank?

• A financial tracker

• A financial intermediary

• A financial advisor

• A financial investigator

What type of account holds money that is guaranteed for a specific rate of interest for a specified amount of time?

• Certificate of deposit

• Line of credit

• Checking

• Savings

What entity implements policies concerning the availability of money and its cost?

• The Federal Reserve System

• The Federal Deposit Insurance Corporation

• The National Credit Association

• The National Credit Union Administration

This insures banking customers against loss for up to $250,000:

• National Credit Union Administration (NCUA)

• Federal Deposit Insurance Corporation (FDIC)

• Federal Reserve System

What are the two primary functions of a bank?

• Granting loans and issuing money orders

• Accepting deposits and granting loans

• Handling foreign currency exchange and issuing traveler's checks

• Accepting deposits an issuing certified checks

Which of these is NOT a purpose of the Federal Reserve System (the central bank)?

• Implement policies concerning the availability of money and its cost

• Supervise all banks

• Provide financial services to other banks

• Provide day to day financial assistance to customers and small businesses

You just save $1,500 from working a job being a food delivery person for the past 7 months. You are saving the money for grad school after college because you received a scholarship. Which savings vehicle would be your best option.

• Regular Savings account

• Checking Account

• Certificate of Deposit

• Money Market Account.

How does the FDIC help prevent a bank from failing?

• They help banks find new customers to take out large loans.

• They insure the deposits in the bank to avoid "bank runs" as seen after the 1929 Stock Market Crash

• They promote the banks through advertising and create new business for the bank.

• They pass laws in Congress to allow the banks to charge more in interest.

What is the FEDERAL RESERVE SYSTEM (aka "The FED")?

• Where banks deposit money to be held for safekeeping

• The Central Bank of the United States to provide the nation a stable financial system

• The system used to justify the IRS taking tax money from citizens

• Created by Congress to keep a certain amount of money in case of National Emergency

Barter system is now replaced by

• Banking system
• International system
• Monetary system
• Financial system