« previous next »

Author Question: What problem is addressed by a government safety net for the banking system? What problem is caused ... (Read 93 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?

Approximately one in three babies in the United States is now delivered by cesarean section. The number of cesarean sections in the United States has risen 46% since 1996.

Did you know?

In 2012, nearly 24 milliion Americans, aged 12 and older, had abused an illicit drug, according to the National Institute on Drug Abuse (NIDA).

Did you know?

By definition, when a medication is administered intravenously, its bioavailability is 100%.

Did you know?

Drug-induced pharmacodynamic effects manifested in older adults include drug-induced renal toxicity, which can be a major factor when these adults are experiencing other kidney problems.

Did you know?

To maintain good kidney function, you should drink at least 3 quarts of water daily. Water dilutes urine and helps prevent concentrations of salts and minerals that can lead to kidney stone formation. Chronic dehydration is a major contributor to the development of kidney stones.

The lymphatic system in humans. The lymphatic system in humans.
Polaris system Polaris system
An electrocardiogram (EKG) wave, a record of the electrical signal as it moves through the conductio An electrocardiogram (EKG) wave, a record of the electrical signal as it moves through the conductio
Procedures and Diagnostic Tests Related to the Cardiovascular System Procedures and Diagnostic Tests Related to the Cardiovascular System
The Skeletal System and Its Functions The Skeletal System and Its Functions
Some of the major nerves of the human nervous system Some of the major nerves of the human nervous system
Video: Virtual Tour of the Eye Animation

For a complete list of videos, visit our video library