The Moral Hazard Problem Is Minimized When Deposit Insurance Premiums

question 61

Multiple Choice

The moral hazard problem is minimized when deposit insurance premiums are

• A)zero (not imposed by the FDIC).
• B)the same percentage of assets for all banks.
• C)set at a fixed percentage of assets for large banks, and is zero for small banks.
• D)set at a percentage of assets that is based on the bank's risk level.

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