Moral Hazard Is a Problem in Providing Deposit Insurance Because

question 45

Multiple Choice

Moral hazard is a problem in providing deposit insurance because insured banks are

• A) more likely to make bookkeeping errors.
• B) overly cautious due to extra regulations adopted by the Canada Deposit Insurance Corporation.
• C) more likely to provide bank managers with lavish perquisites.
• D) encouraged to take on more risk.
• E) more likely to offer interest rates on loans that are greater than market interest rates.

---

Definitions:

Epistatic Effects

Interactions between different genes where the effect of one gene is modified by one or several other genes, which can mask or alter the expression of the first gene.

Linkage Disequilibrium

A non-random association of alleles at different genes that are located close to one another on the same chromosome.

Genotypic Interaction

Refers to the complex ways in which genes within an organism interact with each other to influence the organism's traits.

Genetically Programmed Responses

Innate behaviors or reactions in organisms that are predetermined by their genetic makeup and manifest without prior learning or experience.