« previous next »

Author Question: What problem is addressed by a government safety net for the banking system? What problem is caused ... (Read 83 times)

EY67

  • Hero Member
  • *****
  • Posts: 531
on: Jun 30, 2018
What problem is addressed by a government safety net for the banking system? What problem is caused by the safety net?
 
  What will be an ideal response?

Question 2

Credibility is not important in ________.
 
  A) new Keynesian and traditional Keynesian theory
  B) real business cycle and traditional Keynesian theory
  C) real business cycle and new Keynesian theory
  D) traditional Keynesian, new Keynesian and real business cycle theory


FergA

  • Sr. Member
  • ****
  • Posts: 352
Reply #1 on: Jun 30, 2018
Answer to Question 1

The safety net protects good banks from being abandoned by uninformed depositors, so banks can continue to channel funds. The safety net means that bad banks need not worry that depositors will become aware of or care about risky practices, so the incentive to remain prudent is weakened (moral hazard).

Answer to Question 2

B


Related Topics

Need homework help now?

Ask unlimited questions for free

Ask a Question
« previous next »
 

Did you know?

Stroke kills people from all ethnic backgrounds, but the people at highest risk for fatal strokes are: black men, black women, Asian men, white men, and white women.

Did you know?

There are actually 60 minerals, 16 vitamins, 12 essential amino acids, and three essential fatty acids that your body needs every day.

Did you know?

It is important to read food labels and choose foods with low cholesterol and saturated trans fat. You should limit saturated fat to no higher than 6% of daily calories.

Did you know?

The first war in which wide-scale use of anesthetics occurred was the Civil War, and 80% of all wounds were in the extremities.

Did you know?

Your chance of developing a kidney stone is 1 in 10. In recent years, approximately 3.7 million people in the United States were diagnosed with a kidney disease.

reproductive system in plants reproductive system in plants
Current Positions of Known Dwarf Planets and SSSBs in the Outer Solar System Current Positions of Known Dwarf Planets and SSSBs in the Outer Solar System
Block Diagram of Single-stage Pressure System for Dual-Stage Pressure Production of Nitric Acid Block Diagram of Single-stage Pressure System for Dual-Stage Pressure Production of Nitric Acid
Drawing of spirochete's mobility system (with internal flagellae). Drawing of spirochete's mobility system (with internal flagellae).
The Autonomic Nervous System The Autonomic Nervous System
The Urinary System The Urinary System
Video: Secretin (inhibiting gastric acid secretion), Cholecystokinin (fat digestion) & Cholecystokinin

For a complete list of videos, visit our video library