How does a Ponzi scheme work?
A) It places the money in reserve as a part of the Federal Reserve System.
B) It sets the money aside in a fund that cannot be touched except for Social Security payments.
C) It pretends there are funds where there really are none.
D) It uses the money to leverage loans from the World Bank.

Question

Quizplus · Accepted Answer

A Ponzi scheme operates by promising investors high returns with minimal risk. The scheme's operator uses the funds collected from new investors to pay returns to previous investors, creating the illusion of a profitable investment. However, in reality, there are no actual profits or returns being generated, and the scheme will inevitably collapse when there are not enough new investors to support returns for existing investors.

How Does a Ponzi Scheme Work