Why Would a Saver with $10,000 Be More Likely to Put

question 8

Multiple Choice

Why would a saver with $10,000 be more likely to put it into a bank account than to lend it directly to a borrower?

• A)Direct loans of that sort are not legal in the United States.
• B)Banks pay higher interest rates on deposits than individual borrowers are likely to pay to individual lenders.
• C)It is easier and less risky to save money in a bank account and allow the bank to serve as a go-between with potential borrowers.
• D)Interest received from a bank is deductible on the federal income tax, whereas interest received from an individual borrower is not.

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Definitions:

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