Which of the Following Are Reasons That Banks Are So

question 31

Multiple Choice

Which of the following are reasons that banks are so heavily regulated?

• A)Governments are concerned about the safety of deposits.
• B)The industry is a principal determinant of aggregate demand.
• C)Bank failures are contagious.
• D)All of the above are correct.

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Definitions:

Marginal Cost

The increase in total production costs resulting from the production of one additional unit of a product or service.

Artificially Scarce Good

A product or service that is made scarce through artificial means such as monopoly control or government regulations, rather than limited by natural resources.

Externalities

Costs or benefits arising from an economic activity that affect third parties who did not choose to incur that cost or benefit.

Socially Optimal

A condition where resources are allocated in the most efficient way from the society's point of view, maximizing overall welfare.