Which of the Following Is False

question 40

Multiple Choice

Which of the following is false?

• A)Moral hazard refers to the reduction in market discipline that comes with the presence of a safety net to prevent losses. The presence of deposit insurance or the belief that regulators will take mitigating actions in the event of a financial crisis creates moral hazard.
• B)Banks and other intermediaries are given an incentive to invest in riskier loans and investments because of deposit insurance.
• C)Mega mergers in the financial services industry may lead to a moral hazard problem in the future if market participants believe that the resulting firms would be bailed out if they ran into serious problems.
• D)The moral hazard problem also exists in international financial markets if participants believe that no one would bail out a country in crisis, thus reducing losses from what they otherwise would be.

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Definitions:

Sodium Channels

Protein channels in cell membranes that allow sodium ions to pass into or out of a cell, critical for generating and transmitting electrical signals in tissues like nerves and muscles.

Voltage-Activated

Referring to ion channels or processes within cells that are triggered or changed by alterations in electrical membrane potential.

Channel

Opening in a protein embedded in the cell membrane that allows the passage of ions.

Action Potential

A rapid, temporary change in a cell's membrane potential, allowing neurons to communicate through electrical signals.