Where Savings Go: teacher key

How Banks Work, grade 6 edition, written for 6th grade. Banks keep money safe, pool savings and lend them out. Interest can grow on itself, and deposits are insured after the Great Depression.

Read the book. Print this page for the key.

Questions and answers

1. When was the FDIC created?
   • In 1933 (answer)
   • In the year 1913 by the Fed
   • In 1999
2. What is compound interest paid on?
   • Only loans that were repaid late
   • Only deposits made last year
   • Money and earned interest (answer)
3. What is a checking account for?
   • Keeping a pet fish at home
   • Everyday spending (answer)
   • Fixing a broken car engine
4. Why do borrowers pay interest to a bank?
   • To use others' money (answer)
   • To get a debit card for the week
   • To keep money in a jar at home
5. What does the word compound mean in compound interest?
   • Interest that always stays the same
   • Interest charged only one time
   • Interest on interest (answer)

Words

• compound: interest on interest
• deposit: putting money in
• depositor: person who deposits
• withdrawal: money taken out