The Difference in Interest Rates Between Savings Accounts and Loans

question 31

Multiple Choice

The difference in interest rates between savings accounts and loans can be explained, in part, by the:

• A)cost of gathering information on potential borrowers.
• B)risk associated with making loans.
• C)cost of monitoring borrowers once the loan has been made.
• D)All of the Answer s are correct.

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Definitions:

Total Costs

The comprehensive total of all spending required for the creation of goods or services, covering expenses that are both stationary and those subject to change.

Public Utilities

Entities that provide essential services to the public, such as water, electricity, and natural gas, often under government regulation.

Natural Monopolies

Industries where a single firm can supply the entire market at a lower cost than if there were multiple firms, often due to high fixed costs.

Natural Monopoly

A market condition in which a single firm can supply a product or service to an entire market at a lower cost than what would be possible if there were multiple firms.