Unit 9 Economics Review

What is the primary function of financial institutions?

• To provide financial services such as savings, loans, and investments.

• To manufacture consumer goods.

• To provide agricultural equipment.

• To construct residential buildings.

How do financial institutions benefit households?

• They offer tools for saving, borrowing, and investing money.

• They only provide entertainment services to families.

• They help households avoid all forms of taxes.

• They supply households with free groceries every month.

What role do financial institutions play for businesses?

• They offer capital through loans and investment services.

• They provide only marketing services to businesses.

• They manufacture goods for businesses.

• They handle only the recruitment process for businesses.

TEK: ECO-FE 16D – Examine types of accounts available to consumers and their risks, costs, and benefits 4. Name one benefit of a savings account.

• Earns interest on deposits.

• Requires you to pay monthly fees.

• Reduces your credit score.

• Prevents you from accessing your money at any time.

What is a potential risk of using a checking account?

• Overdraft fees.

• Higher interest rates than savings accounts.

• Guaranteed investment returns.

• No access to ATMs.

What type of account allows easy access to money for everyday purchases?

• Checking account.

• Savings account.

• Certificate of deposit.

• Retirement account.

What is the first step in starting a savings program?

• Set financial goals.

• Open a checking account.

• Buy stocks immediately.

• Apply for a credit card.

Why is budgeting important for saving?

• It helps track spending and allocate money to savings.

• It increases your monthly income automatically.

• It eliminates the need to monitor expenses.

• It guarantees you will never overspend.

What does capital formation refer to?

• Accumulation of capital for production and economic growth.

• Increase in population growth rate.

• Development of natural resources only.

• Reduction in the use of technology.

How do banks contribute to capital formation?

• They lend out deposited savings to fund business ventures.

• They print new currency for the government.

• They collect taxes from citizens.

• They set the prices of goods in the market.