Which of the Following Is NOT Likely to Occur When

question 50

Multiple Choice

Which of the following is NOT likely to occur when a bank fails?

• A)Everyone that deposits money in the bank loses all or a portion of their money,unless the country has a functioning deposit insurance system.
• B)The loss of savings (or the feared loss of savings)causes households to cut back on consumption,which spreads the recessionary effect wider through the country.
• C)Unaffected banks may stop making loans as they take a cautious approach,slowing or stopping new investment.
• D)Layoffs occur and the economy falls deeper into a downward spiraling inflation.
• E)Other banks make too many loans to make up for the loans not made by the failed bank,kicking off a cycle of stimulation and inflation.

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