Banks, Credit & the Economy

Does “money” ONLY refer to currency?

• YES

• NO

Answer explanation

Money includes currency and bank account  balances, which can be turned into currency.

Can you make unlimited withdrawals from a savings account?

• YES

• NO

Answer explanation

Federal law limits the number of certain kinds of withdrawals you can make each month.

Is it safe to keep your money in the bank?

• YES

• NO

Answer explanation

The federal government insures bank deposits up to a certain amount of money.

Do banks pay people more for savings accounts than they charge for loans?

• YES

• NO

Answer explanation

Savings accounts pay a TINY amount of interest. Interest you pay on loans is much higher.

Does lending make more money available to spend?

• YES

• NO

Answer explanation

Lending actually multiplies the amount of money out in the community.

Are banks required to keep some money in reserve?

• YES

• NO

Answer explanation

Banks must keep a certain percent of deposits in reserve.

What is the goal of the Fed?

• To keep new money in circulation

• To Keep the economy at low fluctuations

• To print money and distribute it in the nation responsibly

• Balance in the economy

Answer explanation

Banks must keep a certain percent of deposits in reserve.

Who keeps track of your credit history?

• The Federal Reserve

• The police

• Credit Reporting Bureaus

• Credit Card Companies

Answer explanation

Banks must keep a certain percent of deposits in reserve.

What is deflated (adjusted) to reflect the impact of inflation?

• Nominal Data

• Market Data

• Real Data

• Prospective Data

What has to be considered when looking at prices over time?

• Inflation

• Deflation

• quality of the goods

• The perspective of the buyer