Banking

The Federal Reserve transfers profits from its twelve regional banks to

the Department of the Treasury.

Bank deposits help the nation’s economy by

giving banks the money to loan and invest.

Which best explains why banks consider interest on loans to be important?

Interest helps them cover business costs.

How do central banks govern the banking industry? Check all that apply.

*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

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

setting interest rates and acting as a lender to banks.

The main role of banks in the nation’s economy is to

store, lend, and invest money.

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

dropped, which led to more home starts.

Who mostly directly benefits when banks make a profit?

shareholders, companies, and the economy

What types of investments do banks use to make a profit? Check all that apply.

*buying stocks and bonds *buying several properties *buying the rights to loans

Read the graph that displays interest and total payments on a loan.
Banks make the most money and take the most risk with an interest rate of

18 percent