Trivia: What does the FDIC federally insure?
Devaluation
Domestic product
Demand
Deposits
The correct answer is Deposits
So why is this answer correct? : The function of any banking system is largely based on the trust that a person can retrieve funds from a bank whenever necessary. However, a bank doesn’t keep mounds of physical cash in vaults. Instead, banks use their money to invest in other clients or businesses. However, when trust falters, a bank run occurs, which is when customers withdraw their funds over fears of the bank’s financial security. To help prevent this, the FDIC (Federal Deposit Insurance Corporation) insures customers’ deposits of up to $250,000.