The State Bank offers an interest rate of 5.5% on savings and 6% on loans,while the Colonial Bank offers 6.5% on savings and 7% on loans.Which of the following is the likely outcome of such a situation?

Question

Quizplus · Accepted Answer

The Colonial Bank offering higher interest rates on both savings and loans is likely to experience a surge in demand for deposits, as customers would prefer to earn higher returns on their savings. Since the State Bank is offering lower interest rates, it may experience a fall in demand for deposits. There is no information to suggest a change in demand for loans.

The State Bank Offers an Interest Rate of 5