Banks then respond to the changes by raising or lowering their interest rates for depostiors and borrowers. Locate the prime rate of interest, found on the newspaper financial pages. Pretend the Federal Reserve System influenced the prime rate increase by 1 percent. Draw an editorial cartoon which shows how investors might react. Inflation is an overall rise in the level of prices throughout the economy.
Inflation reduces the buying power of money.
Add to that the taxes you must pay on earned interest, and you lose more money. Collect information pamphlets on checking accounts from local banks. Assume you are a high school graduate or a college student and you want to open your first checking account. Weighing costs and benefits of each checking option, decide what account is best for you. For people your age, choosing to save rather than spend carries with it a huge opportunity cost.