How Can the Regulators Reduce the Effects of Moral Hazard

question 50

Multiple Choice

How can the regulators reduce the effects of moral hazard in the absence of depositor discipline?

• A)By allowing DIs to undertake high-risk high-return asset investments.
• B)By basing deposit insurance premiums on a DI's deposit size.
• C)By charging explicit deposit insurance premiums and implicit premiums on DIs.
• D)By exhibiting excessive capital forbearance.

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Definitions:

Central Venous Catheter

A tube inserted into a large vein, used for administering medications or fluids, obtaining blood tests, and directly measuring central venous pressure.

Simultaneous Intravenous Medications

The administration of two or more medications through an IV line at the same time.

Myocardial Infarction

A medical condition also known as a heart attack, occurring when blood flow to a part of the heart is blocked for a long enough time to cause damage or death to heart muscle.

Potassium Chloride

A chemical compound often used in medicine as a supplement to treat or prevent low blood levels of potassium.