The Contagion Effect Refers to the Fact That

question 43

Multiple Choice

The contagion effect refers to the fact that

• A)deposit insurance has eliminated the problem of bank failures.
• B)bank runs involve only sound banks.
• C)bank runs involve only insolvent banks.
• D)the failure of one bank can hasten the failure of other banks.

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Definitions:

Self-Sufficient

The ability to fulfill all of one's needs without relying on external assistance.

Comparative Advantage

The ability of a country, individual, company, or region to produce a particular good or service at a lower opportunity cost than others.

Absolute Advantage

The ability of a country or firm to produce a greater quantity of a good, product, or service than competitors, using the same amount of resources.

Production Costs

The total expense incurred in manufacturing a product or providing a service, including materials, labor, and overhead.