What do banking and financial institutions provide?

• Only loans and currency exchange

• Deposits, loans, investments, and currency exchange

• Education services and real estate management

• Legal and government services

Which of the following is NOT a primary type of bank account?

• Checking account

• Savings account

• Certificate of Deposit (CD)

• Mortgage account

Why is tracking and reconciling bank accounts important?

• To increase loan eligibility

• To ensure accuracy and prevent errors or fraud

• To avoid paying taxes

• To replace the need for budgeting

What is the role of agencies like the FDIC and Consumer Financial Protection Bureau?

• To provide investment advice

• To enforce banking regulations and protect consumers

• To set personal loan interest rates

• To manage individual savings accounts

What is the difference between simple interest and compound interest?

• Simple interest is based on the principal amount, while compound interest is calculated on the principal plus accumulated interest

• Simple interest is paid annually, and compound interest is paid monthly

• Simple interest is always higher than compound interest

• There is no difference between simple and compound interest

What is a disadvantage of high-interest rates on loans?

• They discourage savings

• They can increase debt burdens

• They eliminate the need for compound interest

• They reduce inflation

How does inflation impact purchasing power?

• It increases the value of money over time

• It erodes purchasing power by raising prices for goods and services

• It has no impact on savings or investments

• It only affects people with loans

What strategies can help mitigate the effects of inflation?

• Avoiding investments and keeping all savings in cash

• Diversifying investments and considering inflation-protected securities

• Taking high-interest loans to keep up with inflation

• Ignoring inflation and focusing only on short-term goals

Why is understanding bank accounts important?

• To avoid opening multiple accounts

• To manage finances effectively and choose accounts that meet your needs

• To eliminate the need for financial planning

• To ensure loans are approved

What is the key takeaway about managing banking relationships?

• It eliminates the need for proactive financial planning

• Staying educated and proactive ensures financial stability and growth

• Financial regulations are unnecessary for personal banking

• Banking relationships only matter when borrowing money