A System of Deposit Insurance

question 56

Multiple Choice

A system of deposit insurance

• A)attracts risk-taking entrepreneurs into the banking industry.
• B)encourages bank managers to decrease risk.
• C)increases the incentives of depositors to monitor the riskiness of their bank's asset portfolio.
• D)increases the likelihood of bank runs.

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Definitions:

Identical Product

Products that are seen as the same by consumers, with no differentiation between them.

Product Differentiation

Strategies employed by businesses to make their products appear distinct from those of competitors in aspects like quality, design, or other features.

Physical Differences

Refers to the variations in the physical attributes of individuals or objects, including size, shape, and other measurable characteristics.

Monopolistic Competitor

A firm within a competitive market that has the power to influence prices through product differentiation, sitting between perfect competition and monopoly on the spectrum of market structures.