Answers TX-Personal Financial Literacy and Economics Banking and Financial InstitutionsQuestion 16

16

QuizMultiple Choice

Banking and Financial Institutions

Question 16 • TX-Personal Financial Literacy and Economics

What is the relationship between the Fed and other banks?

Answer

A

The Fed sets the salaries for employees at every bank in the nation.

B

The Fed decides who is eligible for loans and who is not at various banks.

C

The Fed monitors all deposits and loans at local banks to be sure they’re making a profit.

D

The Fed makes sure that banks follow rules, and it loans money to banks that are in a crisis.

Explanation

The Federal Reserve supervises banks to help ensure they follow banking rules. It can also lend money to banks facing a crisis, helping maintain stability in the financial system. It does not set every bank employee’s salary or decide each bank’s individual loan eligibility decisions.

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