Which of the Following Is a Drawback of Charging Flat

question 82

Multiple Choice

Which of the following is a drawback of charging flat deposit insurance premiums?

• A)The FDIC acts more like a private property-casualty insurer when charging flat premiums.
• B)It discourages banks from taking risks.
• C)Both high risk and low risk banks are charged the same premium rate.
• D)High risk banks will be charged an unreasonably high premium rate.
• E)Premiums reflect the expected private costs or losses to the insurer from the provision of deposit insurance.

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Definitions:

MU (Marginal Utility)

The augmented utility or pleasure achieved by consuming an extra unit of a good or service.

Marginal Cost

The outlay required to produce another unit of a product or service.

Marginal Benefit

The additional benefit to a consumer from consuming one more unit of a good or service.

R&D Expenditures

Costs associated with research and development activities undertaken by a company to innovate or improve products or processes.