Which of the Following Is a Drawback of FDIC Insurance

question 91

Multiple Choice

Which of the following is a drawback of FDIC insurance?

• A)It leads to excess industry profits.
• B)It has failed to arrest the trend of bank failures.
• C)It leads to the problem of moral hazard.
• D)It undercuts private insurance companies.

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Definitions:

Units

Refers to a measurement or quantity of something, often used in the context of production, sales, or inventory in various industries.

Utility Function

A function that reflects the satisfaction or utility a consumer derives from consuming goods or services.

Budget Constraint

A constraint on the combinations of goods a consumer is able to purchase, determined by their income level and the costs of these items.

Income

The income earned from labor or investments, often received periodically.