The Development of Brokered Deposits Increased the Moral Hazard Problem

question 78

Multiple Choice

The development of brokered deposits increased the moral hazard problem of deposit insurance by

• A)attracting risk-loving depositors.
• B)in effect, allowing the extension of insurance coverage to deposits above the $100,000 limit.
• C)scaring cautious small depositors away from thrifts.
• D)making depositors more conscious of the need to carefully monitor the behavior of thrift managers.

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Definitions:

Unemployment

The situation when individuals who are capable of working and willing to work cannot find employment.

Balance of Payments

A comprehensive record of all economic transactions between residents of a country and the rest of the world during a specific period.

Balance-of-Economic Transactions

A record of all economic transactions between residents of a country and the rest of the world during a particular period, including trade, investments, and financial transfers.

Bretton Woods Agreement

The Bretton Woods Agreement was established in 1944 to set up a new international monetary system, creating exchange rate stability and promoting international economic cooperation.