10-2 and 3 Multiple Choice

What is a bank run?

• When people deposit money into banks
• When many people try to withdraw their money from a bank all at once
• When banks close for the day
• When banks open new locations

What is the gold standard?

• A special credit card
• A way to measure pure gold
• A system where paper money can be exchanged for gold
• A type of bank account

What is a national bank?

• A bank that operates across the entire country
• A small local bank
• A bank owned by the government
• A place to store gold only

What is the money supply?

• The total amount of coins in a bank
• How much money people save
• The amount of paper bills printed each year
• The total amount of money available in a country

What does liquidity mean?

• How quickly something can be turned into cash
• The amount of water in a bank vault
• How much money someone borrows
• The speed of banking transactions

What is fractional reserve banking?

• A type of savings account
• When banks split money equally
• When banks keep only part of deposits and lend the rest
• When banks charge fees

What is interest?

• A bank holiday
• Extra money paid for borrowing
• Money kept in a safe
• The main part of a loan

What is the principle of a loan?

• Rules about borrowing money
• The person who owns the bank
• The extra money paid on a loan
• The original amount borrowed

What happens when someone defaults on a loan?

• They finish paying it off
• They get a reward
• They make an early payment
• They fail to pay back what they owe

Which best describes a bank's main purpose?

• To print money
• To keep money safe and help people manage it
• To give away free money
• To collect gold only