Proponents of Restricting the Size of Financial Institutions Believe This

question 55

Multiple Choice

Proponents of restricting the size of financial institutions believe this policy will _____, while opponents believe this policy will _____.

• A) allow firms to take advantage of economies of scale; increase the volatility of the financial system.
• B) reduce the number of financial institutions; give institutions the incentive to take excessive risks.
• C) eliminate the need for deposit insurance; encourage imprudent risk taking
• D) make the financial system more stable; lead to higher costs

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Definitions:

Unique Powers

Special abilities or authorities that are distinct and not commonly held or exercised by others.

Agency Relationship

A legal and principal relationship formed between two parties, where one party, the agent, is authorized to act on behalf of another, the principal, in business dealings.

Negligence Alleging

The act of claiming or asserting that a party failed to meet its duty of care, leading to harm or damage.

Independent Contractor

An individual or business that provides goods or services to another entity under terms specified in a contract or within a verbal agreement, not considered an employee.