In the Diamond-Dybvig Model, the Bank's Deposit Contract Has the Following

question 49

Multiple Choice

In the Diamond-Dybvig model, the bank's deposit contract has the following important features:

• A) it allows a bank depositor to withdraw currency.
• B) it insures depositors against the event that they consume early.
• C) it implies that late consumers want to pose as early consumers.
• D) it implies a bank run is prevented.
• E) it gives more consumption to early consumers than later consumers.

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