uestion: Which of the following statements is correct?Multiple…

Question

Anu Bhardwaj · Accepted Answer

Correct Answer: “The interest rate paid on loans differs from the interest rate earned on savings.” Why this is the correct answer: Banks pay you interest when you put money into a savings account . Banks charge you interest when you borrow money (loans, credit cards, etc.). These two interest rates are not the same — in fact, loan rates are usually much higher than savings rates. That’s how banks make money. Let’s quickly debunk the other options: “The interest rate earned on savings is set by the Federal Reserve.” → Not exactly true. The Federal Reserve sets the federal funds rate , which influences other interest rates, but individual banks decide the actual savings rates they offer. “The interest rate paid on loans is the same as the interest rate earned on savings.” → false. Loan interest rates are higher. “The interest rate paid on loans is set by the Federal Reserve.” → Also not accurate. The Fed sets a target rate that influences loan rates, but banks set the actual rates they charge based on various factors. Final Answer: “The interest rate paid on loans differs from the interest rate earned on savings.”

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Electrical engineering

Electrical engineering

Anu Bhardwaj

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