Banking – Flashcards
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Bank deposits help the nation's economy by
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giving banks the money to loan and invest.
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Who mostly directly benefits when banks make a profit?
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shareholders, companies, and the economy
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A fee banks charge in exchange for borrowing money is called _______
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interest
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A responsibility the Federal Reserve has is to
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loan money to banks during a crisis
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An entrepreneur who needs money to create and distribute a new invention would most likely visit
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NOT a commercial banker
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This diagram shows how banking in the financial sector fits into the circular flow model.
Based on the diagram, which example describes how a bank injects money into the economy?
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A bank approves a mortgage for a customer.
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The Federal Reserve transfers profits from its twelve regional banks to
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the Department of the Treasury.
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Banks pay interest to customers through a
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savings account
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Read the graph about mortgage interest rates and housing starts between 1978 and 1983.
A conclusion that can be drawn from both graphs by looking at 1983 is that interest rates
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dropped, which led to more home starts.
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How do central banks govern the banking industry? Check all that apply.
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by deciding how much banks must keep in reserve
by overseeing the nation's payment system
by responding quickly to banking crises that occur
by auditing banks based on current regulations
