Economics Please Help!!!

Why is there a difference between interest charged and interest earned?

A) Banks are non-profit institutions

B) Banks are profit-making institutions

C) Banks must pay more than they receive

D) There is no difference between interest charged and interest earned

Is the answer C??? Please help, thanks!!! (=

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  1. What does C mean? Who do the banks pay? From whom do they receive?

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    Ms. Sue
  2. I'm not sure, that was the question and those are the answer choices, I need help in understanding it.

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  3. Can you explain to me what the question means please? What does 'interest charged' and 'interest earned' mean? Thanks.

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  4. I change my answer to B, that has got to be right, right?

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  5. Interest charged is what the consumer pays to borrow money, the interest on a car loan or a mortgage or a credit card, etc. Interest paid is what the bank or savings and loan (or credit union) pays depositors for the use of their money (on a savings account, a certificate of deposit, etc.) Currently deposits earn interest at about 1% or less. Credit cards charge the customer upwards of 18%. Student loans charge around 10%. Mortgage interest rates are at around 3% or 4%. There is a difference between interest paid and interest charged. Why would that be?

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  6. yes, B is right.

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  7. Thanks, for the much needed help Reed!!! (=

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  8. You're welcome, Sammy. Happy holidays!

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  9. Same to you!

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