Which of the following best describes the relationship between depositors and borrowers?

Depositors lend directly to borrowers.

Borrowers are required to deposit funds.

Banks mediate between them.

Depositors pay for loans.

Reviewed & Verified by Edzy Expert

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.

Answer and Solution

C. Banks mediate between them.

Banks act as intermediaries, linking depositors who have surplus funds with borrowers who need those funds, thus facilitating loans.

Watch Video Solution

Keep Practising

Students who asked this also explored

Continue with nearby questions to strengthen the same chapter concept while you still have the context fresh in mind.

If all depositors withdraw their money at the same time, what is this situation called?

What is a potential consequence for a bank if it has a low reserve ratio?

When taking a loan, what factor is most likely considered by banks to assess repayment capability?

Why do banks often charge higher interest rates for loans compared to the interest paid on deposits?