What's a commercial bank most likely going to do with your money when you deposit it?

Question 10 options:

Keep it in a central safe at the bank until you are ready to withdraw it

Send it to one of the 12 main Federal Reserve Banks for safekeeping

Loan it out to someone else at a higher rate of interest than the rate you are earning

Invest it in the stock market and update your balance according to the market's performance

Answers

Answer 1

Answer:

Loan it out to someone else at a higher rate of interest than the rate you are earning

Explanation:

The principal way commercial banks earn money in a fractional-reserve system, is by obtaining money from the public, and loaning out a fraction of that money at a higher interest rate.

A commerical bank may pay for a deposit an interest rate of, for example, 2 o 3%, but when this commercial bank loans out part of that deposit, it may charge 5, 6, 7% or even more.

This is why commercial banks tend to be very profitable businesses most of the time.

Related Questions

Explain how the processes that create hot-spot volcanic chains differ from the processes that generate volcanic island arcs.

Answers

Answer:

Following are this difference to this question:

Explanation:

It is an interconnected tectonic plate for creating an island arc, in which sea plate sinks into the sea and some other, throughout the continental as well as oceanographic croutons a tourist hotspot volcanic eruption forms, in which lava explodes from its coat.

These volcanos are often far from boundaries with plate lands, and All the types are restrained, however, the volcanic arches connect with the sea, whereas the island arches come into contact with the ocean.

According to Nostrand, Map 10.3, which of the following is not considered one of the three Ohio river ports that had natural advantages for town founding?
a. Cincinnati
b. Pittsburgh
c. Louisville
d. St. Louis

Answers

Answer:

d. St. Louis

Explanation:

St. Louis is a city situated along the western bank of the Mississippi River. Missouri is a state in the United States of america and St. Louis is located in this Missouri state. St. Louis is one of the largest urban areas of this state. Cincinnati , Pittsburgh and Louisville are the cities which are located on the bank of Ohio river while St. Louis located in different state along different river.

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