During the 1980s, Instead of Closing Insolvent Thrifts, the Federal

question 13

Multiple Choice

During the 1980s, instead of closing insolvent thrifts, the Federal Home Loan Bank Board regulators often ignored the problem, allowing the failed institutions to continue. How did these so-called zombie institutions infect healthy institutions?

• A)Zombie institutions paid high interest rates to attract savers, forcing healthy institutions to raise their rates as well.
• B)Zombie institutions offered loans with high interest rates; healthy institutions had to compete by doing the same.
• C)Investors would move funds from the zombie banks into the healthy banks.
• D)Managers would leave zombie institutions and get jobs at healthy banks.

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Definitions:

Assistance

The act of helping or providing aid and support to someone in need.

Problem-Focused Coping

A strategy for managing stress that involves directly confronting a problem and working to resolve it.

Emotion-Focused Coping

A strategy for managing stress by regulating one’s emotional response to stressors rather than confronting the stressors themselves.

Caloric Restriction

A dietary regimen that reduces calorie intake without causing malnutrition, often studied for its effects on longevity and health.