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Question

Banks charge a higher interest rate on loans than what they offer on __________.

A
withdrawals
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B
deposits
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C
loans
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D
demand drafts
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Solution

The correct option is C deposits
  • The interest charged by the bank from its borrowers is higher than the interest it pays to its depositors.
  • The difference between the interest paid by the bank to its depositors and interest paid by the borrowers to the bank is the income of the bank.

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