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Banks & Gov
The United States Economy Section 3
| Question | Answer |
|---|---|
| What sector do banks serve? | Households & Businesses |
| How do banks help the economy with money? | People keep their money in banks Banke help money move through the economy easier |
| What do bankers do with money? | Give it to people and businesses through loans |
| What is a loan? | Money that is lent to people who must pay it back |
| When people pay loans back, what must they do? | Pay a little extra (interest) |
| What is interest? | Extra money paid back on a loan |
| What do bankers do with interest? | Pay it to people who have accounts |
| What helps the economy grow? | People spending money |
| Where is the place that has many bank offices and stock exchanges? | Wall Streeet |
| Where is Wall Street located? | New York City |
| What two types of bank accounts do people have? | Checking & Savings |
| Which bank accounts is designed for using immediately? | Checking |
| Which bank account is designed for holding money for future use | Savings |
| Which kind of bank account earns more interest? | Savings |
| What does government provide? | Goods & services everyone uses- roads, bridges, tunnels |
| What are programs called that help people in need? | Social safety nets |
| What is the idea of a social safety net? | ”Catch” people before they fall into serious trouble |
| What are some social safety nets the United States has in place? | Social Security Medicare Food stamps |
| Where does the government get its money? | Households & businesses |
| What is the government’s bank called? | The Federal Reserve System |
| What is the nickname for the Federal Reserve System? | The Fed |
| What does “The Fed” do? | Watches banks to make sure everyone’s money is safe |
| What pays for goods and services that the government offers? | Taxes |
| Which sectors pays taxes? | Households & businesses |
| What is income tax? | Tax paid to the government from your paycheck |
| How do local governments get money | Sales tax & fines |
| What is sales tax? | Taxes you pay when you buy goods & services |
| What would happen if we didn’t pay taxes? | The government could not provide goods & services |
| When are taxes always do? | April 15 |
| What is April 15? | Tax Day |
| How many states do not charge sales tax? | 5 |
| If a state doesn’t charge taxes , how does its government make money? | Higher income tax |
| What are regulations? | Rules businesses have to follow |
| Why do businesses need to follow regulations? | So they don’t hurt the public trying to make money |
| What happens if a business does not follow regulations? | Fined or shut down |
| What happens if there are too many laws? | They can be hard to follow |
| What happens if there are too few laws? | There could be problems- people could get hurt |
| What kind of country is the United States? | Capitalist |
| What is a capitalist country? | People & businesses control the economy- they make decisions about what to make or buy |
| What is free enterprise? | Freed to do [mostly] what you want with your money |
| When does the government need to help the economy? | During an emergency (like a war) |
| What did the government have to do during WWII to make sure there were enough resources to fight the war? | Ration goods |
| What does it mean to ration goods? | Use things carefully so you don’t use too much |
| What items were rationed during WWII? | Rubber, gas, cement, meat & sugar |
| What is opportunity cost? | Giving up something you want |
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