Which of the Following Has Been a Problem Faced by the FDIC

question 445

Multiple Choice

Which of the following has been a problem faced by the FDIC in its provision of federal deposit insurance?

• A) moral hazard arising from the tendency for the highest-risk banks to be those most interested in obtaining deposit insurance in the first place
• B) adverse selection arising from the tendency for banks to take on more risk after they receive deposit insurance
• C) moral hazard arising from the tendency for banks to take on more risk after they receive deposit insurance
• D) a relatively low number of bank failures each year, which has reduced the need for deposit insurance

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Definitions:

Shareholders

Individuals or entities that own shares in a corporation, giving them certain rights and interests in the company.

Property Taxation

A form of taxation imposed on property owners based on the value of their property.

Income

Money received on a regular basis from work, investments, business operations, or other sources, which is used to fund living expenses, savings, and investments.

Sales Taxation

A tax imposed on the sale of goods and services, which is typically collected by the seller and passed on to the government.