Option 1: "The interest rate earned on savings is set by the Federal Reserve." Incorrect The Federal Reserve does not directly set savings account interest rates . Instead, it sets the federal funds rate , which influences short-term interest rates. Banks then decide what savings rate to offer based on many factors, including that fed rate, their margins, and market competition. Option 2: "The interest rate paid on loans differs from the interest rate earned on savings." Correct Banks pay customers interest on savings , and they charge customers interest on loans . These two rates are always different , and the spread between them is how banks earn profit (called the net interest margin ). Option 3: "The interest rate paid on loans is the same as the interest rate earned on savings." Incorrect As mentioned above, they are not the same . Loan interest rates are higher than savings rates because banks need to cover risks, costs, and profits. Option 4: "The interest rate paid on loans is set by the Federal Reserve." Incorrect The Federal Reserve does not set loan interest rates directly. Like savings rates, loan rates are influenced by the federal funds rate , but the actual rates are determined by individual banks based on risk, loan type, and borrower profile. ✅ Final Answer: "The interest rate paid on loans differs from the interest rate earned on savings."

Mechanical engineering — Q&A

Mechanical engineering

Extracted Text:
Question: Which of the following statements is correct?Multiple choice question. The interest rate earned on savings is set by the Federal Reserve.The... Which of the following statements is correct? Multiple choice question. The interest rate earned on savings is set by the Federal Reserve. The interest rate paid on loans differs from the interest rate earned on savings. The interest rate paid on loans is the same as the interest rate earned on savings. The interest rate paid on loans is set by the Federal Reserve.

Answer

Student’s rating for this solution:

★ ★ ★ ★ ★ (5/5)

YOU HAVE TO REGISTER FOR ANSWER

Mechanical engineering

Mechanical engineering

Anu Bhardwaj

Answer

Extracted Transcript from Images