4
QuizMultiple Choice

Financial Institutions and Banking — Quiz

Question 4 • Personal Finance

What is the relationship between the Fed and other banks?

Answer
A
The Fed monitors all deposits and loans at local banks to be sure they’re making a profit.
B
The Fed sets the salaries for employees at every bank in the nation.
C
The Fed makes sure that banks follow rules, and it loans money to banks that are in a crisis.
D
The Fed decides who is eligible for loans and who is not at various banks.

Explanation

The Federal Reserve supervises and regulates banks to help ensure they follow financial rules. It can also lend money to banks facing a crisis, serving as a lender of last resort. It does not set every bank employee’s salary or decide who receives individual loans.

AI-written and checked against the verified answer.

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