The Following Market Value Balance Sheet of a Failed Bank

question 39

Multiple Choice

The following market value balance sheet of a failed bank ($ millions) $$\begin{array} { | l | l | l | l | } \hline \text { Assets } & 400 & \text { Insured Deposits } & \$ 200 \\\hline & & \text { Uninsured Deposits } & \$ 400 \\\hline\end{array}$$
-If the insured depositor transfer resolution method is utilized, what is the cost to insured depositors of bank failure resolution?

• A)$0.
• B)-$200 million.
• C)$67 million.
• D)$133 million.
• E)$200 million.

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Definitions:

U.S. Monetary Policy

The Federal Reserve's actions, involving the control of interest rates and the total supply of money in circulation, aimed at achieving macroeconomic objectives such as controlling inflation, consumption, growth, and liquidity.

Real Interest Income

The interest income adjusted for inflation, representing the true purchasing power of interest earnings over time.

Nominal Interest Income

The amount of money earned from interest before adjusting for inflation; it does not account for the purchasing power of the interest income.

Monetary Policy

Monetary policy involves the management of a nation's money supply and interest rates by its central bank to control inflation, manage employment, and stabilize the currency.