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 LEAST likely outcome of such a situation?
A)The Colonial Bank would experience a surge in demand for loans.
B)The Colonial Bank would experience a surge in demand for deposits.
C)The State Bank would experience a surge in demand for loans.
D)The State Bank would experience a fall in demand for deposits.

Question

Quizplus · Accepted Answer

The Colonial Bank, offering higher interest rates on both savings and loans compared to the State Bank, would likely see an increase in demand for deposits due to the higher savings rate, but not necessarily a surge in demand for loans, as higher loan rates can deter borrowers.

The State Bank Offers an Interest Rate of 5