Question

How do banks mediate between those who have surplus money and those who need money? (3 mark question)

Answer 1

Answer:

Banks keep small portions of cash(15%)for themselves(to pay the depositors on demand).

Explanation:

They use major portions of the deposits to extend loans to those who need money.

Answer 2

Answer:

Hey buddy here is your answer:-

• Banks accept deposits from people who have surplus money, paying them interest on these deposits.
• The banks use the major portion of the deposits to extend loans to those who need money, charging them slightly higher interest than what they pay to the depositors.
• This difference is the major source of income for banks. In this way banks mediate between those who have surplus money and those who need money.

Explanation:

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