While Deposit Insurance Was Designed to Make the Banking Industry

question 136

Multiple Choice

While deposit insurance was designed to make the banking industry more stable,it contributed to the banking crisis of the 1980s because:

• A)the FDIC only insured commercial banks.
• B)the ceiling on insured deposits was too low.
• C)too many banks were insufficiently insured.
• D)depositors became too complacent about the risks that the banks were taking.
• E)unsafe banks were "kicked out" of the deposit insurance system.

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Definitions:

Inventory Volumes

The total amount of goods a company has available for sale or production at any given time, often measured in units or cost value.

Periodic Inventory System

An accounting method that updates inventory balance and cost of goods sold at the end of an accounting period.

Computerized Optical Scanning Equipment

Technology devices used for electronically converting images of text, handwriting, or printed documents into machine-encoded text or images.

Perpetual Systems

Inventory management systems that continuously update the record of inventory levels with each sale or purchase, providing real-time information.