Florida US History EOC Practice Exam

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What does the Federal Deposit Insurance Corporation (FDIC) provide to American citizens?

Insurance against natural disasters
Federal insurance for bank deposits up to a certain amount
Life insurance policies for government employees
Retirement funds for teachers and educators

The correct answer is: Federal insurance for bank deposits up to a certain amount

The Federal Deposit Insurance Corporation (FDIC) provides federal insurance for bank deposits, which is a critical safety net for American citizens. Established in 1933 during the Great Depression, the FDIC was designed to restore public confidence in the banking system. The FDIC insures deposits made at member banks, protecting customers against the loss of their deposits if a bank fails. Currently, this insurance covers deposits up to $250,000 per depositor, per insured bank, for each account ownership category. This insurance not only safeguards individual bank customers' funds but also helps to stabilize the banking system by preventing bank runs, where large groups of depositors withdraw funds simultaneously due to fears about a bank's solvency. This function contributes to overall financial stability in the economy, reassuring the public that their money is secure in the bank.