Cost of Money

When you take out a loan, what do you have to pay back?

• Only the interest
• Only the principal
• Fees and taxes
• Principal and interest

Tags

CCSS.5.NBT.A.2

The longer you wait to pay back a loan.....

• The loan amount decreases over time.
• You can ignore the loan without consequences.
• Interest rates will drop automatically.
• The total amount owed increases.

Tags

CCSS.7.RP.A.3

How long does it take for the effects of any increase or decrease in interest rates to be felt?

• Immediately
• 2 to 5 years
• 12 months

• 1 to 3 months

Tags

CCSS.7.RP.A.3

When interest rates rise what happens to the economy?

• The economy will grow rapidly.
• Inflation will decrease significantly.
• Unemployment rates will drop immediately.
• The economy slows down.

When interest rates fall, what happens to the economy?

• The economy contracts as people save more money.
• Interest rates have no effect on the economy.
• The economy becomes stagnant with no changes in spending.
• The economy is stimulated and speeds up.

What is a bond?

• A bond is a type of stock that represents ownership in a company.
• A bond is a financial instrument used for trading commodities.
• A bond is a savings account offered by banks.
• A bond is a certificate issued by a government or company promising to pay back borrowed money at a fixed rate of interest on a specified date.

Why do you make interest on a savings account?

• You make interest on a savings account because banks use your deposits to lend money and invest, sharing the earnings with you.
• You make interest because the government guarantees it.
• Interest is earned from the fees charged by the bank.
• You receive interest as a reward for keeping your money idle.

Tags

CCSS.6.RP.A.3C

What kind of interest do you usually make on a savings account?

• Simple interest
• Fixed interest
• Compound interest

• Variable interest

Tags

CCSS.7.RP.A.3

What is an advantage and a disadvantage of a savings account?

• High fees for maintenance
• Unlimited withdrawals allowed
• No minimum balance requirement
• High safety and liquidity but low interest rates

How does the FED protect people who deposit their money in banks?

• The FED mandates that all banks must charge fees for deposit accounts.
• The FED allows banks to invest depositors' money in high-risk stocks.
• The FED guarantees unlimited withdrawals from any bank.
• The FED protects depositors by insuring their deposits through the FDIC and regulating banks.