The Argument That Deposit Insurance Can Prevent the Failure of an Otherwise

question 4

Multiple Choice

The argument that deposit insurance can prevent the failure of an otherwise sound bank is based on the idea that

• A)potential deposits need not be concerned about account overdrafts.
• B)the existence of deposit insurance may prevent self-fulfilling panics.
• C)deposit insurance restores confidence in the stock market.
• D)bank examinations by the Canada Deposit Insurance Corporation (CDIC)weed out badly managed banks.
• E)deposit insurance restores confidence in the bond market.

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Definitions:

Information-Processing

A cognitive approach that compares the mind to a computer, focusing on how people encode, store, and retrieve information.

Cognitive Developmental

Refers to the process by which individuals acquire and evolve in their capacity to think, reason, and understand the world.

Social Learning

A theory that suggests individuals learn behaviors, norms, and values primarily through observing and imitating others within a social context.

Cognitive Processing

The mental actions or processes involved in acquiring knowledge, understanding through thought, experience, and senses.