Which of the Following Is NOT a Potential Problem Due

question 48

Multiple Choice

Which of the following is NOT a potential problem due to federal depository insurance?

• A) Banks have an incentive to make riskier loans than they would otherwise.
• B) Depositors have little incentive to monitor the behavior of the managers of the depository institutions.
• C) Depositors demand greater interest rates on their deposits to compensate them for the riskier behavior of the managers of the depository institutions.
• D) Lenders have less incentive to investigate the credit-worthiness of borrowers.

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Definitions:

Policy Gaps

Situations where there is a lack of adequate policies to address certain issues or challenges, often leading to unmet needs or inefficiencies.

Dispute

A disagreement, conflict, or argument between parties over a particular issue, which may necessitate resolution through negotiation, mediation, or legal means.

Colleagues

Refers to individuals working together in the same organization or profession, often implying a peer relationship.

Arbitration

A method of dispute resolution where an impartial third party makes a decision to settle the dispute outside of court.