Which of the Following Is a Consequence of Deposit Insurance

question 153

Multiple Choice

Which of the following is a consequence of deposit insurance?

• A) It may induce the officers of a bank to take more risks.
• B) It encourages banks to make loans only to the most credit-worthy customers.
• C) It minimizes the risk of defaulting on loans made to the bank's customers.
• D) It encourages depositors to closely scrutinize a bank's lending activities.

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Definitions:

Statistic

A numerical value calculated from a sample of data, used to estimate characteristics of the population from which it is drawn.

Critical Value

A threshold value in statistical testing which the test statistic must exceed to reject the null hypothesis.

Population Parameter

A measure that signifies a trait of a whole population, like its average or standard deviation.

Sample Size

The total count of individual samples or observations used in a statistical study, directly impacting the study's conclusions' reliability.