Praxis 5511 Practice Test Practice Question
When individuals deposit money into banks, the banks use most of this money to
Correct Answer: A
Rationale: Depositing money into banks primarily enables them to issue loans to customers (Option A). This process allows banks to earn interest on loans, which is a significant part of their business model.
Option B is incorrect; while banks may invest in the stock market, it is not the primary use of deposited funds.
Option C is misleading; banks do pay employees, but this expense is covered by their income rather than directly from deposits.
Option D, although true in some respects, misrepresents the main function of deposits, as taxes and operating expenses are not the primary use of deposited funds.
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