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How do banks ...

Question

How do banks make money?

A

By charging higher interest for the loan given

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B

By giving low interest on deposits

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C

By charging high interest for the credit than what they give for the deposits

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D

By charging lower interest for the credit than what they give for the deposits

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Solution

The correct option is C By charging high interest for the credit than what they give for the deposits

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Similar questions

How do banks make money?

Q. How do banks bridge the gap between the money in hand and the money in demand?

Q. How do banks make profits?

Explain how do 'operations' by the central bank affect money creation by commercial banks.

Q. Assertion (A): Banks earn their profits by mobilising the depositor's money to the borrowers and keeping a portion of the interest charged.

Reason (R): Banks function for service motives; they do not function to make money, so they charge only interest and do not make any profits.

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