Banking — Quiz Answers

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Which statement best describes the effects of low and high interest rates on the economy?

A
High interest rates discourage consumers from investing, while low interest rates encourage investment.
B
High interest rates encourage consumers to borrow and spend, while low interest rates encourage saving.
C
Low interest rates encourage consumers to invest, while high interest rates discourage investment.
D
Low interest rates encourage consumers to borrow and spend, while high interest rates encourage saving.
23

Which statement best describes the effects of low and high interest rates on the economy?

A
High interest rates discourage consumers from investing, while low interest rates encourage investment.
B
Low interest rates encourage consumers to invest, while high interest rates discourage investment.
C
Low interest rates encourage consumers to borrow and spend, while high interest rates encourage saving.
D
High interest rates encourage consumers to borrow and spend, while low interest rates encourage saving.
24

Banks pay interest to customers through a

A
mortgage account.
B
401k account.
C
savings account.
D
credit card account.
25

What explains the difference between retail and commercial banking?

A
Commercial banks loan money to small businesses, while retail banks loan money to large corporations.
B
Retail banks loan money to small businesses, while commercial banks loan money to large corporations.
C
Commercial banks help small businesses make capital purchases, while retail banks help big businesses invest.
D
Retail banks help big businesses make capital purchases, while commercial banks help consumers invest.
26

The Federal Reserve manages the nation’s currency and money supply by

A
overseeing bank collections and payments on loans.
B
offering investment advice and adjusting interest rates.
C
dictating criteria and setting loan terms for banks.
D
manipulating interest rates and acting as a lender to banks.
27

Which best explains why banks consider interest on loans to be important?

A
Interest helps them cover business costs.
B
Interest helps them to satisfy customers.
C
Interest enables them to stockpile money.
D
Interest enables them to control the economy.
29

Which statement best describes the effects of low and high interest rates on the economy?

A
High interest rates discourage consumers from investing, while low interest rates encourage investment.
B
High interest rates encourage consumers to borrow and spend, while low interest rates encourage saving.
C
Low interest rates encourage consumers to invest, while high interest rates discourage investment.
D
Low interest rates encourage consumers to borrow and spend, while high interest rates encourage saving.
30

The Federal Reserve manages the nation’s currency and money supply by

A
manipulating interest rates and acting as a lender to banks.
B
dictating criteria and setting loan terms for banks.
C
offering investment advice and adjusting interest rates.
D
overseeing bank collections and payments on loans.
31

The Federal Reserve Bank of the United States is also known as the

A
people’s bank.
B
world bank.
C
central bank.
D
retail bank.
32

The Federal Reserve Bank of the United States is also known as the

A
people’s bank.
B
central bank.
C
retail bank.
D
world bank.
33

A responsibility the Federal Reserve has is to

A
loan money to corporations for capital.
B
provide banking services to consumers.
C
provide financial services to corporations.
D
loan money to banks during a crisis.
34

The Federal Reserve manages the nation’s currency and money supply by

A
offering investment advice and adjusting interest rates.
B
overseeing bank collections and payments on loans.
C
dictating criteria and setting loan terms for banks.
D
manipulating interest rates and acting as a lender to banks.
35

Which is the correct order of entities that benefit when banks make a profit?

A
employees, shareholders, and the economy
B
employees, companies, and the economy
C
shareholders, companies, and the economy
D
shareholders, shoppers, and the economy
36

The Federal Reserve Bank of the United States is also known as the

A
retail bank.
B
world bank.
C
central bank.
D
people’s bank.
37

Which statement best describes the effects of low and high interest rates on the economy?

A
Low interest rates encourage consumers to borrow and spend, while high interest rates encourage saving.
B
High interest rates discourage consumers from investing, while low interest rates encourage investment.
C
High interest rates encourage consumers to borrow and spend, while low interest rates encourage saving.
D
Low interest rates encourage consumers to invest, while high interest rates discourage investment.
39

Which best explains why banks consider interest on loans to be important?

A
Interest enables them to stockpile money.
B
Interest enables them to control the economy.
C
Interest helps them to satisfy customers.
D
Interest helps them cover business costs.

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