Economics · Unit 9

Money, Banking and Credit

Banks, interest, credit, and central banks

Banks do not simply store money and lend it out. Lending creates deposits, and the system's stability depends on not everyone asking for their money at once.

The unit covers banks, savings accounts, interest, credit and loans, and central banks.

This unit breaks down into 23 short steps and 118 questions, starting at difficulty 1 and building to 5. Below you can see exactly what it covers, how the path is structured, and worked examples with explanations.

Steps: 23
Questions: 118
Difficulty: 1-5

What this unit covers

Banks
Savings and Accounts
Credit and Loans
Central Banks
Interest

Where this fits

Follows Money and Trade. Needed for Macroeconomics.

Where people slip

Interest is the price of money over time and works in both directions. The same rate that rewards saving penalises borrowing, which is why central banks use it as a lever.

How the unit is structured

Money, Banking and Credit runs as 23 short steps that unlock in order. 17 are practice rounds and 6 are challenge rounds that pull together everything before them. Questions start at difficulty 1 and climb to 5 as you progress.

Step 1 · easierStep 23 · harder

Challenge rounds

Example questions

30 real questions from this unit, with the answer and the reason behind it, grouped by what they practise. There are 118 in the unit altogether.

Banks

Fill the blankLevel 1
1. When you put money into your account at the bank, you make a ____.
- depositcorrect
- withdrawal
- loan
- budget
Putting money into your account is called a deposit.
True or falseLevel 1
2. A bank is a safe place to keep your money.
Answer: True
Yes, banks are built to keep your money safe.
Choose all that applyLevel 2
3. Which of these are things a bank commonly does? (Choose all that apply)
- Keeps your money safecorrect
- Lends money to peoplecorrect
- Pays interest on savingscorrect
- Grows fruit on trees
- Flies passenger airplanes
Banks keep your money safe, lend money, and pay interest on savings.
Match the pairsLevel 2
4. Match each bank word to what it means.
Answer: Deposit = Putting money into your account; Withdrawal = Taking money out of your account; Teller = A worker who helps you at the counter; ATM = A machine that gives you cash
These are the everyday words you use when banking.
Multiple choiceLevel 2
5. Why do many people keep their money in a bank instead of under a mattress at home?
- It is safer there and can even earn interestcorrect
- The bank gives everyone free toys
- Money grows into plants at the bank
- Keeping cash at home is against the law
In a bank the money is safer and can even earn a little interest.
Guess the numberLevel 5
6. In the simple model with a 10% reserve requirement and no cash leaking out, what is the money multiplier (the total dollars of deposits the banking system can create from one dollar of new reserves)?
Answer: 10
The simple money multiplier equals 1 divided by the reserve ratio, so 1 / 0.10 = 10.

Central Banks

True or falseLevel 1
7. A central bank helps manage a whole country's money.
Answer: True
Yes, managing the nation's money is exactly what a central bank does.
Choose all that applyLevel 2
8. Which of these are things a central bank does? (Choose all that apply)
- Issues the country's moneycorrect
- Acts as a bank for other bankscorrect
- Helps keep prices stablecorrect
- Sells toys to children
- Delivers pizza
A central bank issues the country's money, acts as a bank for other banks, and helps keep prices stable.
Multiple choiceLevel 2
9. A central bank is ____.
- a country's main bank that manages its moneycorrect
- a bank inside a shopping mall
- a bank only for children
- the largest ATM in a country
A central bank is a country's main bank that manages its money.
Odd one outLevel 2
10. Which of these is NOT usually a job of a central bank?
- Selling clothes in a shopcorrect
- Issuing the country's money
- Helping keep prices stable
- Being a bank for other banks
Selling clothes in a shop is not something a central bank does.
Match the pairsLevel 3
11. Match each central bank to its country or region.
Answer: Federal Reserve = United States; European Central Bank = The euro area; Bank of England = United Kingdom; Bank of Japan = Japan
Different regions have their own central banks that manage their money.
Fill the blankLevel 4
12. In the US, the rate banks charge one another for overnight loans, which the Federal Reserve targets, is the federal ____ rate.
- fundscorrect
- tax
- rent
- gift
The federal funds rate is the overnight interbank lending rate the Fed steers to guide the economy.

Credit and Loans

Choose all that applyLevel 2
13. Which of these are common types of loans? (Choose all that apply)
- A mortgage for a housecorrect
- A student loan for collegecorrect
- A car loancorrect
- A free birthday gift
- A tax refund
Mortgages, student loans, and car loans are all common kinds of loans.
Fill the blankLevel 2
14. Borrowing money now and promising to pay it back later is called using ____.
- creditcorrect
- cash
- savings
- coins
Borrowing now to pay later is called using credit.
Multiple choiceLevel 2
15. What does it mean to buy something 'on credit'?
- You get it now and pay for it latercorrect
- You pay twice the price
- You get it completely free
- You return it the next day
Buying on credit means you get it now and pay for it later.
Odd one outLevel 2
16. Which of these is NOT a way of borrowing money?
- A gift you never repaycorrect
- A bank loan
- A credit card
- Borrowing from a friend
A gift you never repay is not borrowing, because borrowing must be paid back.
Put in orderLevel 2
17. Put these steps of getting and repaying a small loan in the right order.
Answer: Ask the bank to borrow money -> The bank gives you the money -> You use the money -> You pay the money back with interest
You ask to borrow, get the money, use it, then pay it back with interest.
Sort into groupsLevel 3
18. Sort each item as a secured loan or an unsecured loan.
Answer: Mortgage on a house = Secured loan; Car loan using the car as collateral = Secured loan; Most credit card debt = Unsecured loan; A basic personal loan with no collateral = Unsecured loan
Secured loans are backed by collateral, while unsecured loans are not.

Interest

Multiple choiceLevel 1
19. An interest rate is usually shown as a ____.
- percentagecorrect
- color
- day of the week
- letter of the alphabet
Interest rates are written as a percentage, like 3%.
Choose all that applyLevel 2
20. Which of these can earn you interest? (Choose all that apply)
- Money in a savings accountcorrect
- Money in a bank account that pays a ratecorrect
- Coins hidden in a jar at home
- Money you already spent
Money kept in a savings account or a bank account that pays a rate can earn interest.
Fill the blankLevel 2
21. When you borrow money, you usually pay back what you borrowed plus extra money called ____.
- interestcorrect
- change
- allowance
- pocket money
The extra you pay for borrowing is called interest.
Guess the numberLevel 2
22. If you put 100 dollars in a savings account that pays 10% interest in a year, how many dollars of interest will you earn in that year?
Answer: 10 dollars
10% of 100 dollars is 10 dollars, so you earn 10 dollars of interest.
True or falseLevel 2
23. Interest is money you earn when you save, and money you pay when you borrow.
Answer: True
Interest works both ways: you earn it on savings and pay it on loans.
Odd one outLevel 3
24. Three of these describe interest you EARN. Which one is interest you PAY?
- Interest on a car loancorrect
- Interest on a savings account
- Interest on a certificate of deposit
- Interest the bank adds to your savings
Interest on a car loan is money you pay, while the others are interest you earn on savings.

Savings and Accounts

Multiple choiceLevel 1
25. Why is it a good idea to save some money?
- So you have money for future needs or emergenciescorrect
- So the bank can spend it for fun
- Because saving is against the rules
- So your money disappears
Saving gives you money for future needs or surprise emergencies.
Choose all that applyLevel 2
26. Which of these are good ways to save money? (Choose all that apply)
- Putting coins in a piggy bankcorrect
- Opening a savings accountcorrect
- Setting aside part of your allowancecorrect
- Spending all your money right away
- Losing your wallet
A piggy bank, a savings account, and setting aside part of your allowance all help you save.
Fill the blankLevel 2
27. The account you use for everyday spending, often with a debit card, is a ____ account.
- checkingcorrect
- savings
- loan
- credit
A checking account is the one you use for daily spending.
Odd one outLevel 2
28. Which of these does NOT help you save money?
- Spending your whole allowance on candycorrect
- Putting money in a piggy bank
- Using a savings account
- Keeping part of your birthday money
Spending your whole allowance on candy is the opposite of saving.
Put in orderLevel 2
29. Put these steps of opening a new savings account in the right order.
Answer: Choose a bank -> Fill out the account application -> Deposit your first money -> Watch your balance earn interest
You choose a bank, apply, deposit your first money, then watch it earn interest.
Sort into groupsLevel 2
30. Sort each item by what it is mainly used for.
Answer: Savings account = Keeping money for later; Piggy bank = Keeping money for later; Checking account = Everyday spending; Debit card = Everyday spending
A savings account and piggy bank are for keeping money, while a checking account and debit card are for everyday spending.

Where these questions come from. Each unit starts as a plan of the concepts it should cover and the difficulty it should span. Questions are written against that plan with AI assistance, then checked by a validator that rejects anything without a single defensible answer, an explanation, or plausible wrong options. How we write questions sets out the whole process, and corrections are fixed in the bank and reach the site and the app the same day.

How you practise

This unit mixes 10 different question formats, so you are recalling and applying rather than recognising the same layout every time.

Choose all that apply
Fill the blank
Guess the number
Match the pairs
Multiple choice
Odd one out
Put in order
Sort into groups
True or false
Type the answer

Practise Money, Banking and Credit

118 questions across 23 steps. Start with step one and crawl at your own pace.

Play this unit

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