Which term best describes the institution that accepts deposits and makes loans?

• A. Public Goods
• B. Bank
• C. Externality
• D. Asset

Answer: (B)

Taking deposits and making loans describes a bank, which is a financial intermediary. Banks gather money from savers and then lend it to borrowers, providing a key function in the economy by channeling funds from those who want to save to those who want to borrow. They also offer payment services and help with money creation through the lending process. The other terms don’t describe a financial institution: public goods are things everyone can use without subtracting from others, externalities are spillover effects of economic activity, and an asset is something with value owned by someone. So the term that best fits is the bank.