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:

Government

The organized governing body of a nation, state, or community, responsible for creating and enforcing laws, policies, and regulations.

Consumers

Individuals or entities that use goods or services produced within an economy.

Producers

Individuals or companies that create goods or services for sale or exchange.

Excise Tax

A tax imposed on specific goods, services, or transactions, often aimed at discouraging their use or raising government revenue.