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:

Equal Rates

A principle or condition where all individuals or elements within a group or context are treated or affected uniformly, without discrimination.

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