The Manner in Which FDIC Deposit Insurance Is Set Up

question 143

Multiple Choice

The manner in which FDIC deposit insurance is set up in the United States encourages banks to

• A) be too conservative in their lending practices.
• B) maintain excess reserves that are too great.
• C) make riskier loans than they otherwise would.
• D) reject some loans that probably would be profitable.

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Definitions:

Managerial Responses

The actions or decisions taken by managers in reaction to internal or external factors impacting the organization.

Two-factory Theory

A psychological theory that proposes that human emotions consist of two components: physical arousal and a cognitive label that specifies the emotion.

Classical Conditioning

A learning process that occurs through associations between an environmental stimulus and a naturally occurring stimulus, leading to a learned response.

Operant Conditioning

A method of learning that occurs through rewards and punishments for behavior, encouraging the subject to associate certain behaviors with consequences.