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Single Answer MCQ
Q-00045409

How do banks primarily earn income?

1

By charging low fees for account maintenance

2

By offering high-interest rates on savings accounts

3

By charging higher interest rates on loans than they pay on deposits

4

By investing in government bonds

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Sandeep Chaturvedi

Sandeep Chaturvedi

CBSE Social Science & Humanities Reviewer

Social science and humanities educator with 14+ years of experience reviewing CBSE SST, economics, commerce, arts, and vocational content.

M.A. HistoryM.A. Political ScienceB.Ed.

Answer and Solution

Answer

C. By charging higher interest rates on loans than they pay on deposits

Solution:

Banks make money by charging borrowers a higher interest rate on loans than the interest they pay to depositors, allowing them to profit from the difference.

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