Pretest

Question 1

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

Revolt · Accepted Answer

shareholders, companies, and the economy

Question 2

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

Revolt · Accepted Answer

manipulating interest rates and acting as a lender to banks.

Question 3

A responsibility the Federal Reserve has is to

Revolt · Accepted Answer

loan money to banks during a crisis.

Question 4

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

Revolt · Accepted Answer

Low interest rates encourage consumers to borrow and spend, while high interest rates encourage saving.

Question 5

Which banker would a software company most likely visit for help to raise large amounts of capital to acquire, or buy out another company?

Revolt · Accepted Answer

an investment banker

Question 6

The Federal Reserve transfers profits from its twelve regional banks to

Revolt · Accepted Answer

the Department of the Treasury.

Question 7

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

Revolt · Accepted Answer

Interest helps them cover business costs.

Question 8

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

Revolt · Accepted Answer

central bank.

Question 9

What explains the difference between retail and commercial banking?

Revolt · Accepted Answer

Retail banks loan money to small businesses, while commercial banks loan money to large corporations.

Question 10

Banks pay interest to customers through a

Revolt · Accepted Answer

savings account.

Pretest Answers