Negative Externalities Exist in the Depository Sector When

question 3

Multiple Choice

Negative externalities exist in the depository sector when:

• A)the fear of DI insolvency leads to bank deposit runs
• B)lending activity is impaired or constrained
• C)there are delays in disbursements from insolvent DIs
• D)All of the listed options are correct.

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Definitions:

Moral Standards

Principles that govern behaviors and actions, determined by societal norms, ethics, and laws defining what is considered right and wrong.

Law Breakers

Individuals who violate rules or regulations established by legal authority.

Moral Order

An arrangement of society that is considered to be in line with moral laws or principles.

Age of Globalization

A period marked by increased interconnectedness and interdependence of peoples and countries worldwide, largely due to advancements in communication, transportation, and trade.