Which Statement Best Characterizes the Lending Strategy of Banks

question 174

Multiple Choice

Which statement best characterizes the lending strategy of banks?

• A) Banks make most their profits from account fees.
• B) Banks lend mostly to large and familiar companies rather than smaller local firms.
• C) Banks charge borrowers a slightly lower interest rate than they pay to depositors.
• D) Banks lend money both for investment and consumption purposes.

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Definitions:

Constant

A fixed value that does not change in mathematical equations or scientific experiments, often representing fundamental principles or conditions.

Long-run Cost Curve

A graphical representation of the costs incurred by a firm to produce different levels of output in the long run when all inputs are variable.

Production Costs

The total expense incurred in manufacturing a product or providing a service, including materials, labor, and overhead costs.

Manager Experience

The accumulated knowledge, skills, and competencies that an individual acquires through holding managerial roles over time.