In May 1991,the FDIC Announced That It Would Sell the Government's

question 64

Multiple Choice

In May 1991,the FDIC announced that it would sell the government's final 26% stake in Continental Illinois,ending government ownership of the bank that it had rescued in 1984. The FDIC took control of the bank,rather than liquidate it,because it believed that Continental Illinois

• A)was a good investment opportunity for the government.
• B)could be the Chicago branch of a new governmentally-owned interstate banking system.
• C)was too big to fail.
• D)would become the center of the new midwest region central bank system.

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Definitions:

Inflation Rate

The rate at which the expense of goods and services mounts, leading to decreased potency of purchasing power.

Nominal Interest Rate

The interest rate before adjustment for inflation, representing the actual percentage earned or paid on a financial investment or loan.

Consumer Price Index (CPI)

A measure of the overall cost of the goods and services bought by a typical consumer.

Inflation Rate

The percentage increase in the price of goods and services over time, which leads to a decrease in the ability to purchase.