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

question 309

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:

Taxpayers

Individuals or entities that are required to pay taxes to a governing body, contributing to public revenue for governmental spending.

Leachate

Liquid that has percolated through a solid and leached out some of its constituents, often used in the context of water passing through waste material in landfills.

Contaminated Water

Water that has been polluted by chemical substances, bacteria, or other pathogens, making it unsafe for human consumption and use.

Percolates

The movement of water or other liquids through a porous medium, often referring to the process of water filtering through soil layers.