The Frequency of Banking Panics Was Greatly Reduced When

question 65

Multiple Choice

The frequency of banking panics was greatly reduced when

• A) the Federal Reserve was created
• B) the federal government started insuring banking deposits
• C) the Federal Reserve increased the required reserve ratio
• D) the Federal Reserve started using open market operations
• E) the Federal Reserve decided to take a less active role in controlling the money supply

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Definitions:

Risk Adjustment

A process used in finance and insurance to modify predictions or values based on known risks or uncertainties to make them more accurate or representative.

Net Present Value

A financial metric used to assess the profitability of an investment or project by calculating the difference between the present value of cash inflows and outflows over a period of time.

Internal Rate of Return

The discount rate at which the net present value of an investment's cash flows equals zero, used as a metric to evaluate the profitability of potential investments.

Interest Rates

The cost of borrowing money or the return earned from lending money, typically expressed as a percentage of the principal.