The Contagion Effect Refers to the Fact That

question 43

Multiple Choice

The contagion effect refers to the fact that

• A)deposit insurance has eliminated the problem of bank failures.
• B)bank runs involve only sound banks.
• C)bank runs involve only insolvent banks.
• D)the failure of one bank can hasten the failure of other banks.

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Definitions:

Larger Bequest

Pertains to a greater amount of money or property left to someone in a will, highlighting the concept in inheritance and estate planning.

Marginal Tax-Rate

The rate at which the next dollar of taxable income is taxed.

Substitution Effect

The change in consumption that results when a price change moves the consumer along a given indifference curve to a point with a new marginal rate of substitution.

Income Effect

The change in consumption that results when a price change moves the consumer to a higher or lower indifference curve