Question

video: edpuzzle: is the savings account dead?
watch this edpuzzle video (up to the 5:05 mark) and answer the questions about savings accounts and wealth building. watch this video to learn more about the role of savings accounts. then, answer the questions either in edpuzzle or below.

1. the video references a high yield account. what does \high yield\ mean?

a. giving a low return
b. giving a high return
c. free to open with any deposit amount
d. requiring a high initial deposit amount

1. what happens to the money that you deposit at a bank?

a. the bank lends out the money at a higher interest rate than what they are paying you
b. the bank lends out the money at a lower interest rate than what they are paying you
c. the money sits at the bank until you are ready to withdraw or use it.
d. the money is sent to the federal reserve, where it sits until youre ready to withdraw or use it

1. if inflation is at 2% and you are earning 1% return on your savings account, what is your

eal return?\
a. +3%
b. -3%
c. +1%
d. -1%

Explanation:

Step1: Define high yield account

A high yield account refers to an account that generates a higher rate of return (interest) compared to standard savings accounts.

Step2: Analyze bank deposit mechanics

Banks profit by lending deposited funds at higher interest rates than they pay to depositors.

Step3: Calculate real return

Real return = Nominal return - Inflation rate
$\text{Real return} = 1\% - 2\% = -1\%$

Answer:

1. b. Giving a high return
2. a. The bank lends out the money at a higher interest rate than what they are paying you
3. d. -1%