In a Bank Run,the Equilibrium Deposit Contract in the Diamond-Dybvig

question 35

Multiple Choice

In a bank run,the equilibrium deposit contract in the Diamond-Dybvig model

• A) makes both early and late consumers better off.
• B) makes early consumers no better off and makes late consumers worse off.
• C) makes early consumers worse off and makes late consumers better off.
• D) makes both early consumers and late consumers worse off.
• E) provides an illiquidity transformation service to consumers.

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Definitions:

Antitrust Law

Legislation aimed at preventing anti-competitive practices, monopolies, and fostering fair competition in the market.

Product Price

The financial cost at which a good or service is sold to consumers in the market.

Deregulation

The removal of most or even all of the government regulation and laws designed to supervise an industry. Sometimes undertaken to combat regulatory capture.

Industrial Regulation

Government policies aimed at regulating the operations of industries to prevent unfair practices and ensure competition.