« previous next »

Author Question: What problem is addressed by a government safety net for the banking system? What problem is caused ... (Read 95 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?

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-known contraceptive was crocodile dung, used in Egypt in 2000 BC. Condoms were also reportedly used, made of animal bladders or intestines.

Did you know?

Chronic marijuana use can damage the white blood cells and reduce the immune system's ability to respond to disease by as much as 40%. Without a strong immune system, the body is vulnerable to all kinds of degenerative and infectious diseases.

Did you know?

Patients who have been on total parenteral nutrition for more than a few days may need to have foods gradually reintroduced to give the digestive tract time to start working again.

Did you know?

The familiar sounds of your heart are made by the heart's valves as they open and close.

Endocrine System - Fish Endocrine System - Fish
An HACCP System Flowchart An HACCP System Flowchart
Anatomy of the respiratory system Anatomy of the respiratory system
American Government: Roots and Reform, 2009 Edition American Government: Roots and Reform, 2009 Edition
Receptors in the Autonomic Nervous System Receptors in the Autonomic Nervous System
Female Reproductive System - Oocyte "بويضة الجهاز التناسلي " Female Reproductive System - Oocyte "بويضة الجهاز التناسلي "
Video: Non-specific disease resistance mechanisms & Skin's defense barriers

For a complete list of videos, visit our video library