Banking — Unit test

Question 1

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 2

What might cause a change in the value of fiat money?

Revolt · Accepted Answer

a change in government regulations

Question 3

The Federal Reserve transfers profits from its twelve regional banks to

Revolt · Accepted Answer

the Department of the Treasury.

Question 4

Which scenario is an example of cost-push inflation?

Revolt · Accepted Answer

An increase in workers’ wages raises the production cost of cars, and car prices rise as a result.

Question 5

Which best describes why taxes and savings are considered leakage factors?

Revolt · Accepted Answer

They take money out of the economic system.

Banking — Unit test Answers