Future Business Leaders of America (FBLA) Personal Finance Practice Test

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What is a key feature of a Money Market Account compared to a traditional savings account?

Higher risk investment
Not FDIC insured
Higher interest rates with variable rates
Limits on transactions per month

The correct answer is: Higher interest rates with variable rates

A Money Market Account (MMA) is designed to offer higher interest rates compared to a traditional savings account, and these rates are typically variable, meaning they can change over time based on market conditions. This feature makes MMAs appealing to individuals looking to earn a better return on their deposits while still having access to their funds. Unlike traditional savings accounts, which usually offer fixed interest rates, MMAs can provide fluctuating rates that may increase during periods of economic growth or rising interest rates. This means that as market rates go up, the interest earned on the MMA can also increase, potentially yielding a higher overall return compared to a standard savings account. Furthermore, while there are restrictions on the number of transactions allowed per month with an MMA, the defining feature in the context of this question is the opportunity for higher interest rates, setting it apart from traditional savings accounts.