Depository institutions
A) make profit from the spread between the interest rate they pay on deposits and the interest rate they receive on loans.
B) make their profit by charging the government for their services.
C) make zero profit but receive compensation by the government because their services are so valuable.
D) make a profit according to how much the Federal Reserve pays them.

Question

Quizplus · Accepted Answer

Depository institutions make their profit by earning interest on the loans they give out, which is usually higher than the interest they pay on deposits. This difference is called the spread and is the primary way in which they earn revenue.

Depository Institutions