The Best Way for a Government to Stop the Failure

question 91

Multiple Choice

The best way for a government to stop the failure of one bank from turning into a bank panic is to:

• A) make sure solvent institutions can meet the withdrawal demands of depositors.
• B) declare a bank holiday until solvent banks can acquire adequate liquidity.
• C) limit the withdrawals of depositors.
• D) provide zero-interest rate loans to all banks regardless of net worth.

---

Definitions:

Prefrontal Cortex

The front part of the frontal lobes of the brain, involved in complex cognitive behavior, personality expression, decision making, and moderating social behavior.

Confabulations

The production of fabricated, distorted, or misinterpreted memories about oneself or the world, without the intention to deceive.

Wild Guesses

Attempts to answer or predict something without any basis, knowledge, or method.

Cerebral Cortex

The cerebral cortex is the outer layer of the cerebrum in the brain, playing a key role in memory, attention, perception, cognition, awareness, thought, language, and consciousness.