When interest rates fall, the rates that a bank pays on deposits typically decline less than the interest rates that the bank earns on its loans and investments.

Question

Quizplus · Accepted Answer

When interest rates fall, the rates that a bank pays on deposits typically also decline, but the interest rates that the bank earns on its loans and investments tend to adjust in a similar direction, though the timing and magnitude of adjustments can vary.

When Interest Rates Fall, the Rates That a Bank Pays