« previous next »

Author Question: What problem is addressed by a government safety net for the banking system? What problem is caused ... (Read 115 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?

In Eastern Europe and Russia, interferon is administered intranasally in varied doses for the common cold and influenza. It is claimed that this treatment can lower the risk of infection by as much as 60–70%.

Did you know?

The first monoclonal antibodies were made exclusively from mouse cells. Some are now fully human, which means they are likely to be safer and may be more effective than older monoclonal antibodies.

Did you know?

Recent studies have shown that the number of medication errors increases in relation to the number of orders that are verified per pharmacist, per work shift.

Did you know?

For high blood pressure (hypertension), a new class of drug, called a vasopeptidase blocker (inhibitor), has been developed. It decreases blood pressure by simultaneously dilating the peripheral arteries and increasing the body's loss of salt.

Did you know?

All adults should have their cholesterol levels checked once every 5 years. During 2009–2010, 69.4% of Americans age 20 and older reported having their cholesterol checked within the last five years.

Variegated leaves caused by a mutation in cpDNA Variegated leaves caused by a mutation in cpDNA
Prolapsed uterus. (a) A prolapse is the abnormal drop of the uterus into the vagina, representing th Prolapsed uterus. (a) A prolapse is the abnormal drop of the uterus into the vagina, representing th
The explosion of the Maine in Havana harbor, killing 260 men, caused much speculation in the newspap The explosion of the Maine in Havana harbor, killing 260 men, caused much speculation in the newspap
Disorders of the Male Reproductive System Disorders of the Male Reproductive System
Spinal changes caused by osteoporosis. Use light pressure and gentle stretches only with frail or ... Spinal changes caused by osteoporosis. Use light pressure and gentle stretches only with frail or ...
Solution to Physics problem Solution to Physics problem
Video: Enzyme structure - Properties of enzymes

For a complete list of videos, visit our video library