The best explanation for how banks attract loanable funds is "By paying interest to savers". Here's why:

1. Banks are financial institutions that accept deposits from the public and create credit. They are intermediaries between savers who lend money and borrowers who take loans.

2. To attract these savers (or depositors), banks offer them a return on their money. This return is often in the form of interest. The interest rate is essentially the price of the loanable funds, paid by the bank to the savers.

3. When savers deposit their money in a bank, they are essentially lending their money to the bank. In return, the bank pays them interest. This is how banks attract loanable funds.

4. The other options are not as directly related to how banks attract loanable funds. Deferring household consumption is more related to individual saving behavior. Supplying capital to businesses and charging interest on loaned funds are ways banks use and profit from the loanable funds, but not how they attract them.

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The best explanation for how banks attract loanable funds is "By paying interest to savers". Here's why:

1. Banks are financial institutions that accept deposits from the public and create credit. They are intermediaries between savers who lend money and borrowers who take loans.

2. To attract these savers (or depositors), banks offer them a return on their money. This return is often in the form of interest. The interest rate is essentially the price of the loanable funds, paid by the bank to the savers.

3. When savers deposit their money in a bank, they are essentially lending their money to the bank. In return, the bank pays them interest. This is how banks attract loanable funds.

4. The other options are not as directly related to how banks attract loanable funds. Deferring household consumption is more related to individual saving behavior. Supplying capital to businesses and charging interest on loaned funds are ways banks use and profit from the loanable funds, but not how they attract them.

Knowee AI · Accepted Answer

The best explanation for how banks attract loanable funds is "By paying interest to savers". Here's why:

1. Banks are financial institutions that accept deposits from the public and create credit. They are intermediaries between savers who lend money and borrowers who take loans.

2. To attract these savers (or depositors), banks offer them a return on their money. This return is often in the form of interest. The interest rate is essentially the price of the loanable funds, paid by the bank to the savers.

3. When savers deposit their money in a bank, they are essentially lending their money to the bank. In return, the bank pays them interest. This is how banks attract loanable funds.

4. The other options are not as directly related to how banks attract loanable funds. Deferring household consumption is more related to individual saving behavior. Supplying capital to businesses and charging interest on loaned funds are ways banks use and profit from the loanable funds, but not how they attract them.

Multiple Choice QuestionWhich of the following best explains how banks attract loanable funds?Multiple choice question.By deferring household consumptionBy paying interest to saversBy supplying capital to businessesBy charging interest on loaned funds

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