Many States Had Their Own Insurance Fund to Protect Depositors

question 49

Multiple Choice

Many states had their own insurance fund to protect depositors. The critical problem with these state funds is:

• A) they are monopolies in their own state and extract extremely high prices for the insurance they provide.
• B) they are highly inefficient they cannot achieve the economies of scale a federal fund can achieve.
• C) they do not have regulators as knowledgeable as the regulators at FDIC.
• D) no state fund is large enough to withstand a run on all of the banks it insures.

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Definitions:

Continental Lithosphere

The solid outer layer of the earth that includes the crust and the uppermost mantle, specific to continents and characterized by its thickness and composition which differ from the oceanic lithosphere.

Magmatism

The geological process involving the generation, movement, and solidification of magma or molten rock beneath the Earth's surface.

Plate Boundaries

Regions where two tectonic plates meet, which can result in geological activity such as earthquakes and volcanic eruptions.

Thermal Disturbance

Localized or widespread change in temperature that affects an area's thermal equilibrium, often caused by geological events.