Banks earn a profit by
A)keeping as many reserves on hand as possible.
B)making loans at a lower interest rate than the rate that they offer on their deposits.
C)charging an interest rate on their depositors' accounts.
D)making loans at a higher interest rate than the rates that they offer on their deposits.
E)not paying interest on their reserves.

Question

Quizplus · Accepted Answer

Banks earn a profit by making loans at a higher interest rate than the rates that they offer on their deposits. This difference in interest rates is known as the net interest margin. Banks also charge fees for various services, such as overdraft fees, which can also contribute to their profitability.

Banks Earn a Profit by