Banks are private firms that accept deposits from savers and extend loans to borrowers. They act as intermediaries between savers and borrowers by pooling the funds of savers and then using those funds to extend loans to borrowers. This allows savers to earn a return on their savings and borrowers to access the funds they need to finance their projects or investments.

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Banks

Question 19

Multiple Choice

Banks

A) are the only type of financial intermediary.
B) are savers looking for opportunities to earn a return on their savings.
C) have been owned by the government since the Great Depression.
D) are private firms that accept deposits and extend loans.
E) complicate the connection between borrowers and savers.

Correct Answer: