How Money Works in Our Economy

Dr. Forrester explains the concept of money, how it is earned and spent, and the importance of understanding paper money denominations. The video covers borrowing money, interest rates, and the significance of savings for financial security. It emphasizes the need for financial preparedness for unexpected expenses.

What does the expression 'money doesn't grow on trees' imply?

• Money can be easily found in nature.

• Money needs to be earned through work.

• Money is made from trees.

• Money is abundant and free.

Which of the following is NOT a commonly used American paper money denomination?

• $10.00 bill

• $200.00 bill

• $5.00 bill

• $1.00 bill

How do banks make money from lending?

• By charging a fee for each loan

• By charging interest on the money lent

• By taking a percentage of the borrower's salary

• By selling the borrower's assets

What does 'saving for a rainy day' mean in economic terms?

• Saving money for buying a car

• Saving money for unexpected expenses

• Saving money for a sunny day

• Saving money for a vacation

Why is it beneficial to have a savings account?

• To receive free banking services

• To borrow more money from the bank

• To earn interest on deposited money

• To avoid paying taxes