What is the criticism leveled against deposit insurance by the FDIC?
What will be an ideal response?
Depositors who are freed from any risk of loss from a failing bank will not bother to shop around for safer banks. This problem is an example of what is called the moral hazard problem: the general idea that, when people are well-insured against a particular risk, they will put little effort into making sure that the risk does not occur. In this context, some of the FDIC’s critics argue that high levels of deposit insurance actually make the banking system less safe.
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Compensation paid to employees represented ________ of GDP for the United States in 2014
A) about 5 percent B) approximately 15 percent C) 35 percent D) more than 50 percent
The lower the exchange rate, the cheaper are foreign-produced goods and services
Indicate whether the statement is true or false
The XYZ Co sells shirts. Shirts with the company label on the tag are perceived to be of higher quality than shirts with the store's label. Yet, shirts are of identical quality regardless of label
The demand for perceived high-quality shirts is ph = 50 - qh. The demand for perceived low-quality shirts is pl = 10 + ph – ql. The firm can produce shirts at TC = qh + ql. How many shirts does the firm label as low quality and how many as high quality? What prices are charged?
Refer to Scenario 16.1. Initially Sam and Sally are allocated 10 cheese doodles and 10 pretzels each. Which of the following statements are TRUE?
A) The initial allocation is Pareto optimal as it is equitable. B) The initial allocation is Pareto optimal as Sally and Sam have equal amounts of both goods. C) The allocation is not Pareto optimal. An allocation that gave Sam all of the cheese doodles and Sally all of the pretzels would make both of them better off. D) The allocation is not Pareto optimal. An allocation that gave Sam four of the cheese doodles and sixteen of the pretzels (leaving Sally the rest) would make both of them better off.