Financial Institutions and Banking Answers

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Which statement best describes money?

Money only includes paper bills and metal coins.

Money is always counted in US dollars.

Money is what people use to buy goods and services.

Money is not part of the banking industry.

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What are the most basic functions of a bank? Choose two correct answers.

to encourage economic growth and low unemployment

to hold deposits in checking and savings accounts

to make loans to individuals and businesses

to maintain stable prices in the economy

to monitor the money supply

When do customers pay interest to a bank?

when maintaining a checking account

when encouraging economic growth

when opening a savings account

when borrowing money

What can affect the interest rate for a loan? Choose three correct answers.

the time of the year the loan is taken out

the customer’s ability to repay the loan

the customer’s social media posts

what the loan is used for

economic conditions

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Why does the Federal Reserve decrease the money supply?

to grow the economy and create jobs

to reduce inflation and maintain stable prices

to lower interest rates and promote borrowing

to keep bank from losing money and failing

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