Depository banks borrow from depositors primarily on a _____ basis and lend to others on a _____ basis.
A)short-term; long-term
B)long-term; long-term
C)short-term; short-term
D)long-term; short-term

Question

Quizplus · Accepted Answer

Depository banks typically offer short-term deposit products such as savings accounts and checking accounts to attract funds from depositors. They then use these funds to make longer-term loans to borrowers such as homebuyers or businesses. This approach allows the bank to earn a profit on the spread between the interest rate paid on deposits and the interest rate charged on loans.

Depository Banks Borrow from Depositors Primarily on a _____ Basis