Which of the Following Is Likely to Be More of a Problem

question 60

Multiple Choice

Which of the following is likely to be more of a problem after the introduction of deposit insurance?

• A) moral hazard
• B) adverse selection
• C) contagion
• D) bank runs

---

Definitions:

Explicit Costs

Dollar costs incurred by business firms, such as wages, rent, and interest.

Implicit Costs

The opportunity costs that are not directly incurred but represent the loss of alternative benefits when choosing one option over another.

Explicit Costs

Direct, out-of-pocket payments for goods and services required to run a business.

Accounting Profit

Sales minus explicit cost. Implicit costs are not considered.