WorksheetsBanks & Interest
Total questions: 14
Worksheet time: 7mins
If the amount paid back is $2200 and the amount borrowed is $2000, what is the interest?
$100
$150
$200
$250
Which of the following is a factor that affects interest rates?
Lender’s alternatives
Borrower's height
Borrower's age
Borrower's favorite color
Which of the following factors can cause interest rates to vary?
Time
Borrower's favorite movie
Borrower's pet's name
Borrower's favorite book
How do banks make money from loans?
By charging fees
By charging interest
By selling assets
By investing in stocks
What happens when borrowers repay loans with interest?
The bank loses money
The bank breaks even
The bank makes money
The bank returns the money to the government
What do banks do with the interest they earn from loans?
Pay interest on deposits
Invest in new technologies
Donate to charity
Pay employee salaries
Why do banks practice Fractional Reserve Banking?
To increase their profits by loaning out money.
To keep all deposits safe.
To avoid paying interest on deposits.
To reduce the number of customers.
What is the key difference between Fractional Reserve Banking and Full Reserve Banking?
Fractional Reserve Banking keeps all deposits, while Full Reserve Banking loans out all deposits.
Fractional Reserve Banking loans out a portion of deposits, while Full Reserve Banking keeps all deposits.
Fractional Reserve Banking does not accept deposits, while Full Reserve Banking does.
Fractional Reserve Banking is illegal, while Full Reserve Banking is not.
What is one of the main purposes of keeping a reserve in Fractional Reserve Banking?
To invest in real estate.
To ensure liquidity for withdrawals.
To pay off bank loans.
To increase bank profits.
Why do banks want to attract deposits?
To increase their capital for lending
To reduce their liabilities
To avoid paying taxes
To decrease their assets
How do banks spread out risk?
By diversifying their investments
By investing in a single sector
By avoiding all investments
By keeping all money in cash
According to the analogy, what happens when the music stops in a bank run scenario?
Everyone gets their money.
There aren't enough chairs (money) for everyone.
The game continues.
The bank increases its reserves.
What is the main cause of a bank run according to the provided material?
High interest rates
All depositors asking for their money at the same time
Low loan approval rates
Increased bank fees
What can cause depositors to worry that the bank will lose their money?
High interest rates
Failing assets
Increased loans
Government regulations
