The interest charged on loans is determined by the __________?
A. Exchange rate B. Fiscal policy C. Risk associated with the loan D. Rate of production in the country
Correct Answer: C
Explanation
They make money on the interest they charge on loans because that interest is higher than the interest they pay on depositors' accounts. The interest rate a bank charges its borrowers depends on both the number of people who want to borrow and the amount of money the bank has available to lend.
