The Too-Big-To-Fail Policy

question 81

Multiple Choice

The too-big-to-fail policy

• A)reduces moral hazard problems.
• B)puts large banks at a competitive disadvantage in attracting large deposits.
• C)treats large depositors of small banks inequitably when compared to depositors of large banks.
• D)allows small banks to take on more risk than large banks.

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Definitions:

Accounts Receivable

Money owed to a business by its customers from the sale of goods or services on credit.

Credit

A financial arrangement where a borrower receives something of value with the agreement to repay it later, often including interest.

Normal Balance

The side of an account that is usually positive or increased; for assets and expenses, it's the debit side, for liabilities, equity, and revenue, the credit side.

Account

An individual record within a financial system or ledger that tracks the financial transactions of a specific asset, liability, revenue, expense, or equity component.