Why Is the Failure of a Large Bank More Detrimental

question 91

Multiple Choice

Why is the failure of a large bank more detrimental to the economy than the failure of a large steel manufacturer?

• A)The bank failure usually leads to a government bailout.
• B)There are fewer steel manufacturers than there are banks.
• C)The large bank failure reduces credit availability throughout the economy.
• D)Since the steel company's assets are tangible,they are more easily reallocated than the intangible bank assets.

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Definitions:

Unenforceable

A term describing a contract or clause that, due to illegalities or other issues, cannot be legally upheld or enforced by a court.

Illegal Contract

A contract that involves doing something that is against the law or against public policy, and therefore is unenforceable in a court of law.

Public Policy

Principles and standards considered by the government to be of benefit to the community and used as a guide for legislative action.

Noncompetition Clauses

Provisions in employment contracts that prevent employees from entering into competition with their employer for a certain period after leaving the company.