The Most Effective Mechanism for Reducing Runs on Banks Is

question 26

Multiple Choice

The most effective mechanism for reducing runs on banks is _____.

• A)the discount rate
• B)deposit insurance
• C)the reserve requirement
• D)open-market operations
• E)the Federal Reserve note

---

Definitions:

Limited Liability Partnership

A partnership in which some or all partners have limited liabilities, protecting individual partners from personal responsibility for certain partnership debts.

Personal Liability

The obligation of an individual to repay debts from personal assets, often occurring when corporate or business liability protections are not in place.

Wrongful Acts

Actions or behaviors that are illegal or morally incorrect, often leading to legal consequences or liability.

Limited Partnership

A business structure where at least one partner is liable only up to the amount of their investment, while at least one other has unlimited liability.