Banking Answers

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1
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The Federal Reserve Bank of the United States is also known as the

A
people’s bank.
B
central bank.
C
world bank.
D
retail bank.
3

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.
4

Read the graph about mortgage interest rates and housing starts between 1978 and 1983.A conclusion that can be drawn from both graphs by looking at 1983 is that interest rates

Question illustration
A
dropped, which led to more home starts.
B
peaked, while home starts bottomed out.
C
climbed, which led to fewer home starts.
D
bottomed out, while home starts peaked.
5

The Federal Reserve transfers profits from its twelve regional banks to

A
investment and commercial banks.
B
central banks in Europe and Asia.
C
the Department of Commerce.
D
the Department of the Treasury.
6

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

A
manipulating interest rates and acting as a lender to banks.
B
overseeing bank collections and payments on loans.
C
dictating criteria and setting loan terms for banks.
D
offering investment advice and adjusting interest rates.
8

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

A
employees, shareholders, and the economy
B
shareholders, shoppers, and the economy
C
employees, companies, and the economy
D
shareholders, companies, and the economy
10

Banks pay interest to customers through a

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

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