Question

A small town has a local bank that has been in business for over 50 years. Is this bank required to jointhe Federal Reserve System?
(1 point)
No, only national banks are required to join.
Yes, if has accounts with more than $250,000 in them.
Yes, banks that are not part of the Fed cannot accept deposits.
No, it has been in business so long that joining the fed is not required.
A)
Why does lowering interest rates help the economy?
(1 point)
All actions by the Fed help the economy.
Low rates are not usually followed by raising rates.
More people borrow when rates are low, so more money is spent.
Interest rates are similar to exchange rates for international currency.

Answer 1

Q1: No — only national banks are required to join.
Explanation: Membership in the Federal Reserve System is mandatory for nationally chartered banks; state-chartered banks may choose to become members if they meet requirements.

Q2: More people borrow when rates are low, so more money is spent.
Explanation: Lower interest rates reduce the cost of loans and discourage saving, encouraging consumer and business borrowing, investment, and spending, which stimulates economic activity.