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AssignmentMultiple Choice

Unit Test

Question 1 • FL-2102373-Personal Finance and Money Management Honors

When do banks make money from deposits?

Answer
A
when people withdraw money from their account
B
when banks pay interest to account holders
C
when people add money to their account
D
when banks loan the money to another consumer

Explanation

Banks can use deposited money to make loans to other consumers and earn interest on those loans. That interest income can exceed the interest and other costs the bank pays, creating profit. Deposits and withdrawals themselves do not directly make the bank money.

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