If the Government Did Not Offer the Too-Big-To-Fail Safety Net

question 101

Multiple Choice

If the government did not offer the too-big-to-fail safety net:

• A)Large banks would be more disciplined by the potential loss of large corporate accounts
• B)The moral hazard problem of insuring large banks would increase
• C)The moral hazard problem of insuring large banks would not be affected
• D)The FDIC deposit insurance limits would have to be raised

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Definitions:

Basaltic Lava

A type of lava that is low in silica content, highly fluid, and originates from the partial melting of the upper mantle.

Lava Fountains

Explosive volcanic eruptions that eject lava high into the air in a spectacular display, often from a single vent or fissure.

Pahoehoe Lava

A type of basaltic lava flow with a smooth, unbroken surface that resembles ropey or wrinkled skin, flowing more fluidly than other types.

Aa Lava

A type of lava flow characterized by a rough, jagged surface formed when more viscous lava cools and solidifies.