Although the CDIC Was Created to Prevent Bank Failures, Its

question 72

Multiple Choice

Although the CDIC was created to prevent bank failures, its existence encourages banks to ________.

• A) take too much risk
• B) hold too much capital
• C) open too many branches
• D) buy too much stock

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Definitions:

Gross Investment

The total amount invested in the creation of new capital assets like buildings and machinery before accounting for depreciation.

Disposable Income

is the amount of money that households have available for spending and saving after income taxes have been accounted for.

Capital Stock

The total amount of physical goods and financial assets that are used in the production of goods and services in an economy.

Depreciation

The measure of the reduction in value of an asset over time, often due to wear and tear.