21
QuizMultiple Choice

Saving and Making Financial Decisions — Test

Question 21 • Personal Finance

When depositors put money into a bank, what does the bank do with this money?

Answer
A
The bank sends the money to a central bank in Washington, DC.
B
The bank spends the money on new branches to get more depositors and borrowers.
C
The bank uses the money to make loans to borrowers and earn interest.
D
The bank locks the money in a vault and leaves it there until the depositors want it back.

Explanation

Banks keep some deposits available for withdrawals, but they use much of the money deposited to make loans to people and businesses. Borrowers pay interest on those loans, which helps the bank earn income. So the correct choice is C, the bank uses the money to make loans to borrowers and earn interest.

AI-written and checked against the verified answer.

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