Which of the Following Was an Effect of Bank Runs

question 76

Multiple Choice

Which of the following was an effect of bank runs in the United States during the Great Depression?

• A)Banks, fearing runs, stopped lending their excess reserves, aggravating a fall in the money supply.
• B)An institution called Federal Deposit Insurance Corporation was set up to assist banks during runs.
• C)The government eased regulations to make it easier for savings and loans to compete for deposits with other financial institutions in the national market so that runs could be fought.
• D)There was a fall in housing prices causing many financial institutions to falter.
• E)There was a stock market decline doubled with the problem of high leveraging of financial institutions.

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Definitions:

Profit-Maximizing Price

The price point at which a company can sell its product or service to achieve the highest possible profit, considering the balance between price and sales volume.

Pure Monopolist

A single supplier in a market who has complete control over the price and supply of a unique product or service, without any close substitutes.

Profit-Maximizing

A strategic goal of firms to achieve the highest possible profit from their operations, often through efficient production and pricing strategies.

Nondiscriminating Pure Monopolist

A monopolist who charges all consumers the same price for its product, without price discrimination.