Question

When a customer opens a bank savings account, the bank, essentially, becomes a(n) ____. a) lender b) saver c) borrower d) investor

Answer 1

When a customer opens a bank savings account, the bank becomes a borrower, using the deposits to provide loans to others.

Step-by-step explanation:

When a customer opens a bank savings account, the bank essentially becomes a borrower. Banks act as financial intermediaries because they stand between savers and borrowers. Savers, or depositors, place deposits with banks, and in return, they receive interest payments for the use of their money. Meanwhile, borrowers receive loans from these banks and repay the loans with interest. The money that savers deposit into their savings accounts is often used by the banks to provide loans to borrowers. Therefore, the correct answer to the student's question is (c) borrower.

Answer 2

The bank becomes a borrower when a customer opens a savings account as it uses the deposits to lend to others and must repay the deposit with interest.

Step-by-step explanation:

When a customer opens a bank savings account, the bank essentially becomes a borrower. Banks are financial intermediaries that stand between savers and borrowers. A savings account allows savers to deposit their money with the bank. The bank, in turn, pays interest payments to the account holder and can use the deposited funds to give out loans to others. Those who receive loans are borrowers and they repay these loans with interest. Therefore, in this relationship, the bank serves as the borrower as it has to eventually repay the deposited money to the saver, usually with some interest.