The principal economic function of banks is to:
A)take deposits.
B)make loans.
C)sell financial services.
D)encourage spending.
E)None of the options is correct.

Question

Quizplus · Accepted Answer

The principal economic function of banks is to make loans. Banks receive deposits from customers but their main role is to use those deposits to provide loans to individuals, businesses, and governments. This generates interest income for the bank and allows individuals and organizations to access the financing they need for various purposes. While banks may also sell financial services, such as investment products and insurance, this is not their primary function. Encouraging spending is not typically a key role of banks.

The Principal Economic Function of Banks Is To