Which of the following has been a problem faced by the FDIC in its provision of federal deposit insurance?
A) a relatively low number of bank failures each year, which has reduced the need for deposit insurance
B) moral hazard arising from the tendency for the highest-risk banks to be those most interested in obtaining deposit insurance in the first place
C) adverse selection arising from the tendency for banks to take on more risk after they receive deposit insurance
D) moral hazard arising from the tendency for banks to take on more risk after they receive deposit insurance
D
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The significant difference between adverse selection problems and moral hazard problems is
a. that adverse selection refers to bad luck, moral hazard refers to bad behaviors. b. that adverse selection applies to markets for goods, moral hazard applies to markets for services. c. only identifiable after an action has been taken. d. that in adverse selection one group of people starts out at a higher risk, while in moral hazard problems, people incur additional risks.
Which of the following is not one of the functions of the Federal Reserve?
a. Clearing checks. b. Printing currency. c. Supervising and regulating banks. d. Controlling the money supply.
Scarcity:
A. exists because resources are unlimited while human wants are limited. B. means we are unable to have as much as we would like to have. C. will likely be eliminated as technology continues to expand. D. is not an issue addressed in economics.
Suppose that you own a house. What is the opportunity cost of living in the house?
A. There is no opportunity cost because you own the house. B. There is no opportunity cost unless you could set up a business in the house. C. The opportunity cost is the rent you could have received from a tenant if you didn't live there. D. The opportunity cost is the cost of your monthly mortgage payment plus bills.