Question

Write one paragraph that summarizes clearly why banks are important to the U.S. economy and how government actions can affect how banks operate.

Don't write the paragraph, just say the main points

Answer 1

Banks are important to the U.S. economy because
⇒ they have the ability to lend people money so they can borrow it
⇒ they provide insurance for people who want to save $$
⇒ give businesses the opportunity to grow and invest

Government actions can affect how banks operate:

⇒ Taxes
- reconstruct money from consumers and producers to gov't coffers
- The ↑ the tax, the less money people have to spend.


⇒ Wholesale Interest Rates
 - rates that are loaned to retail banks by central banks
 - retail banks share money with consumers and producers at a huge rate