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AssignmentMultiple Choice

Banking

Question 1 • CHS Economics

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 funds to make loans to other customers and earn interest on those loans. That interest income is generally greater than the interest banks pay to depositors, allowing banks to make money. So the correct choice is “when banks loan the money to another consumer.”

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