A System of Deposit Insurance

question 56

Multiple Choice

A system of deposit insurance

• A)attracts risk-taking entrepreneurs into the banking industry.
• B)encourages bank managers to decrease risk.
• C)increases the incentives of depositors to monitor the riskiness of their bank's asset portfolio.
• D)increases the likelihood of bank runs.

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Definitions:

Theory

A systematic ideology or framework that explains phenomena, based on a significant body of evidence.

Gini Coefficient

The Gini Coefficient measures income inequality within a population, ranging from 0 (perfect equality) to 1 (perfect inequality).

Market Income

The total income earned by an individual or household from market sources before taxes and transfers, including wages, rent, interest, and profits.

Disposable Income

The sum of funds households can allocate towards savings or expenditure once income taxes are deducted.