Banking — Unit test Answers

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Typically, low inflation is a sign of

a healthy economy because it results from a steady rise in demand.

a healthy economy because it results from a steady rise in supply.

a struggling economy because it results from a steady fall in demand.

a struggling economy because it results from a steady fall in supply.

This is a graph of the business cycle.Time is measured along the x-axis. What is measured along the y-axis?

employment levels

prices

economic output

demand

The Federal Reserve transfers profits from its twelve regional banks to

investment and commercial banks.

central banks in Europe and Asia.

the Department of Commerce.

the Department of the Treasury.

Which statement best describes why it is difficult to sell a home during a recession?

Mortgage rates are high.

Demand greatly decreases.

Mortgages become unavailable.

Housing prices increase.

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

manipulating interest rates and acting as a lender to banks.

overseeing bank collections and payments on loans.

dictating criteria and setting loan terms for banks.

offering investment advice and adjusting interest rates.

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