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| Business need to turn a profit but sometimes they need money to get started. Banks will lend them the money they need and charge them a higher interest rate than they are paying depositors. | |
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| But how are businesses able to pay back all the money they borrowed, with interest, and still make consistent profits? | |
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| Well they advertise their goods & services as essential and buying things usually makes people happy. | |
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| So its people like depositors who buy the goods & services. So with the interest they earn on their savings they are able to buy which makes them happy AND expands the economy? | |
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| Sort of. Most of the interest depositors "earn" from savings actually get eaten up by fees that banks charge for keeping your money safe. But buying goods & services does expand the economy. | |
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| But where do people get the money to buy the goods & services if they don't earn it from interest? Not from their savings because they are supposed to save that money right? | |
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