Which of the Following Is NOT Likely to Occur When

question 3

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)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.

---

Definitions:

Depreciation Expense

The systematic allocation of the cost of a tangible asset over its useful life, reflecting the consumption of the asset's economic value.

Goodwill

An intangible asset that arises when a company acquires another company for a price higher than the fair value of its net assets, representing the value of the brand, customer relationships, and other intangible aspects.

Dividend Payable

A liability recognized on a company's balance sheet when it declares dividends to be paid to shareholders.

Pre-acquisition Entries

Accounting entries made to adjust the assets and liabilities of a company being acquired to their fair market values at the date of acquisition.