Scenario: Alpha Bank Has $100,000 in Total Assets and $45,000

question 157

Multiple Choice

Scenario: Alpha Bank has $100,000 in total assets and $45,000 in total liabilities. Beta Bank has $250,000 in total assets and $220,000 in total liabilities.
-Refer to the scenario above.If Beta Bank is faced with a bank run,what must it do?

• A) Liquidate its long-term, illiquid assets
• B) Not pay out the deposits that are being withdrawn
• C) Rely on the FDIC to pay out the withdrawn deposits
• D) Invest more of its short-term assets in long-term assets to protect them

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Definitions:

Public Ownership

Public Ownership refers to the possession of corporations, assets, or industries by the government rather than private individuals or organizations.

Pure Capitalism

An economic system characterized by private ownership of resources and businesses, with minimal government intervention in economic activities.

Pure Command System

An economic system characterized by the public ownership of resources and centralized planning.

Economic Questions

Economic questions are fundamental queries about how societies allocate scarce resources to produce goods and services for consumption, including decisions on what, how, and for whom to produce.