Banks, Savers and Borrowers: teacher key

How Banks Work, grade 5 edition, written for 5th grade. A bank keeps money safe and lends some of it out. Read about interest, insurance for deposits and the Federal Reserve.

Read the book. Print this page for the key.

Questions and answers

1. What does the FDIC do?
   • It makes loans to borrowers
   • It protects people's money if a bank fails (answer)
   • It builds ATM machines
2. How much interest does $100 earn in a year at 3 percent?
   • $13
   • $30
   • $3 (answer)
3. Who owns a credit union?
   • Its members (answer)
   • The Fed
   • The government
4. Why do customers not need to sign up for deposit insurance?
   • It costs too much
   • The Fed pays it
   • It is automatic (answer)
5. What does the word district mean on these pages?
   • A kind of loan
   • An area a Reserve Bank serves (answer)
   • A bank account

Words

• deposit: putting money in
• interest: extra money
• depositor: person who deposits
• district: area served