34. Banks Question Preview (ID: 50782)
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what is the reason smart people put their money in a bank?
a) interest
b) keep it safe
c) keep them from spending it all
d) charity
amount money grows over time
a) opportunity cost
b) scarcity
c) interest
d) capital resources
How can a bank afford to pay 3% interest to depositors?
a) banks are charities that give money way
b) they magically print more money
c) banks charge borrowers 6% interest
d) fees from other depositors
Banks are middle men between depositors and borrowers.
a) True
b) False
c)
d)
A depositor is like a bank for banks; they are actually borrowing money from depositors.
a) True
b) False
c)
d)
Why are banks MORE than just a middle man between depositors and borrowers?
a) bank vaults are necessary to keep money safe
b) they are NOT more than just middle man, and are unnecessary
c) banks are experts at finding the right borrowers, this enables to earn money via loans and pay depositors interest
d) local banks print money
Who is affected when borrowers do not pay back their loans?
a) if a borrow defaults (does not pay back a loan), then they might need to forfeit other property to the bank
b) banks can go out of business if loans are not paid back
c) depositors lose their money when the bank fails
d) all of the above
Which is NOT a consequence of banks going out of business?
a) less money in the economy
b) the economy grows
c) less businesses growth
d) less jobs
Who is to blame for the 2008 financial crisis?
a) Banks, they made risky loans
b) Borrowers, they took out loans that they could not pay bak
c) Government, they forced banks to make bad loans and promised to bail the banks out
d) all of the above
Which is an incorrect opportunity cost pair?
a) risky loans (more loans), high reward (more profit)
b) safe loans (fewer loans), low reward (less profit)
c) risky loans, borrowers default and the bank goes out of business
d) safe loans, borrowers default and the bank goes out of business
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