Question

Suppose the population of Area Y is relatively young and the population of Area O is relatively old. Would interest rates likely be the same or different in the two areas? Explanin. Would a trend toward nationwide branching by banks and the development of nationwide diversified financial corporations affter your answer?

Answer 1

Areas with older population tend have people with more savings per capita, who are more interested in shopping around for the highest interest rates on CDs and savings accounts.

As nationwide bank chains become more prevalent, regional differences in interest rates tend to be less.