300 words about the term “moral hazard” describes increases in risky behavior resulting from efforts to make that behavior safer. How does the concept of moral hazard apply to deposit insurance and other bank regulations?

Q: Which of the following is the most "liquid" in the Money Market? A. Retirement Accounts B. Treasury…

A: * ANSWER :-

Q: What happens in a fractional reserve banking system?  A. Bank panics cannot occur  b. The monetary…

A: The basic function of banks is to accept money from depositors and lend them to borrowers. The bank…

Q: How do central banks affect reserves in the banking system by “open market operations”?

A: Central bank is the apex bank of the economy who helps the government to manage the money flow and…

Q: The first National Bank receives an extra $100 of reserves but decides not to lend out any of these…

A: Answer: The Total deposits created in the banking system are given by:1/LRR x Initial Deposits LRR (…

Q: 1. While cleaning your apartment, you look under the sofa cushion and find a $100 bill and half a…

A: Since you have asked multiple questions, we will solve the first question for you. If you want any…

Q: Why don’t banks hold 100 percent reserves? How is the amount of reserves banks hold related to the…

A: Reserve:The fraction of deposits that banks keep and do not use it give the loans is called the…

Q: What are the complications in the process of deposit expansion and deposit contraction?

A: The deposit expansion is the money created by the reserve banking, in which the money that is…

Q: The fractional reserve banking system refers to a system in which banks

A: All the commercial bank will keep a portion of their deposits as reserve.

Q: What is the term used to describe policy made by the Bank of Canada?

A: In an economy, there are different types of economic policies made by the government of a country or…

Q: Classify each of these transactions as an asset, a liability,or neither for each of the “players” in…

A: Getting a $10,000 loan from the bank to buy an automobile is a asset to the bank because it has the…

Q: If the Fed wants to decrease the quantity of​ money, what actions does it​ take?   What is the…

A: 1. When the Fed wants to decrease the quantity of money in the economy, it makes the open market…

Q: The Fed can put more reserves into the banking system by: 1) Purchasing government securities 2)…

A: "Federal Reserve is the central bank which influences the amount of money and credit in the U.S.…

Q: Required reserves in Bank two should be 10% of $80,000 demand deposits which equals 8,000. Correct?

A: A demand deposit is cash kept into a bank account with reserves that can be removed/withdrawn on…

Q: Are Deposit Insurance Institutions necessary in countries with no history of bank failures?

A: Deposit insurance is a measure carried out in numerous nations to safeguard bank investors, in full…

Q: Using T-accounts, show what happens to checkabledeposits in the banking system when the Fed sells$2…

A: Monetary Base (High powered Money) is the summation of currency (C) in the hands of the public and…

Q: Write a brief answer to the following question. Give two reasons that support the independence of…

A: The Federal Reserve Bank is the central bank of the U.S that was established on December 23, 1913,…

Q: The term “moral hazard” describes increases in risky behavior resulting from efforts to make that…

A: Moral hazard: It refers to the event in which one party gets involved in the risky event which the…

Q: You take $300 you had kept under your mattress and deposit it in your bank account. Suppose this…

A: Money supply refers to the total money circulating in an economy during a period.  The total…

Q: Why does the Federal Reserve require commercial banks to have reserves?

A: Reserves are the obligations of the commercial banks to have against their deposits. These are the…

Q: Discuss the history of banking, from the origin of the term "bank" up to the appearance of the paper…

A: The payment system has evolved with time. Initially, the barter system was used where the…

Q: The Federal Reserve buys $20.00 million in Treasury securities. If the required reserve ratio is…

A: Given  Required reserve ratio rr = 25% excess reserve ratio er = 10% part (a) When Federal Reserve…

Q: In the United States, which of the following systems was established to be in charge of money?Choose…

A: The United States of America's central bank is the Federal Reserve which is also known as the Fed.…

Q: SUSAN: Indeed, it all makes sense. The professor used the term _______ (secific risk, required risk,…

A: The financial crisis of 2008 resulted in collapse of big financial entities. Systematic risk can…

Q: In 2008, the Federal Reserve began paying interest on reserves held by banks. The interest rate they…

A: The reserve deposit ratio, also referred to as the cash reserve ratio, is the portion of deposits…

Q: During recessions, banks typically chose to hold more excess reserves relative to their deposits.…

A: Monetary Policy: It refers to the decision of the central bank regarding the amount of money supply…

Q: What is the role of a clearinghouse under free banking? List at least two, describing each in one or…

A: Financial markets refer to a marketplace where the trading of securities happens, including the…

Q: Why can banks continue to hold reserves that are only a fraction of the demand deposits of their…

A: Bank reserve is the amount of deposit, which is kept by the bank and is not lent to the borrowers.…

Q: much new amount of loan will this bank be able to create

A: If required reserve ratio is 10% Required reserve = deposits × 10% 100,000 * 0.1 =10000 And  Total…

Q: hold 100% of their deposits

A: 100% reserve system in which banks keep the total amount of each depositor’s funds in cash. This…

Q: What does the term "bank failure" mean? What role does FDIC insurance play?

A: (1.) What does the term "bank failure" mean?    A bank failure is the closing down of an insolvent…

Q: If currency held by the public equals $ 100 billion reserves held by banks equal $ 50 billion, and…

A: Money supply ($ billion) = Currency held by public + Bank deposits = 100 + 500 = 600

Q: A bank has $30,000 in deposits and has $5,400 in reserves. What is its reserve ratio?

A: (Q) A bank has $30,000 in deposits and has $5,400 in reserves. What is its reserve ratio? We have…

Q: If the Reserve Bank of Australia sells financial securities, this: a. decreases bank reserves,…

A: (Q)If the Reserve Bank of Australia sells financial securities, this: a. decreases bank reserves,…

Q: In fractional-reserve banking system, such as we have in the united states, banks create money. How…

A: A fractional reserve banking system refers to a system in which banks hold reserves whose value is…

Q: How does federal deposit insurance encourage greater risk taking by banks?  Could the banking system…

A: Banks are the financial institutions regulated by organized or unorganized authorities. Banks work…

Q: How does the Fed increase the level of reserves in the banking system? OPTIONS: by raising interest…

A: Federal Banks or central banks are the apex financial system of an economy who are responsible for…

Q: During the financial crisis of 2007-2008, the FDIC increased deposit insurance coverage from $50,000…

A: Financial crisis refers to the situation when a financial sector of a country faces a downturn in…

Q: How is the amount of reserves banks hold related to the amount of money the banking system creates?

A: A central bank is the apex bank that manage, regulates and implements the rule to be followed by all…

Q: Over the years, the Federal Reserve Banks have printed many billions of dollars more in currency…

A: The federal reserve system refers to the central banking system that is followed in the U.S. Many…

Q: How could higher deposit insurance premiums forbanks with riskier assets benefit the economy?

A: Insurance premium is the money charged by the insurance company from the insured person or business…

Q: What are demand deposits and why should they be included in the stock of money? (Word count: 100…

A: Any item that is accepted as payment for the goods and services provided by an economy is referred…

Moral Hazard

The moral is a person's behavior towards himself /herself, society, organization, and others. Hazard is something that is happening and is not good. A person may be morally good or bad. It depends on his attitude, ethics, integrity, and values. A person may have the highest reverence for money to that for the truth. In this case, the person may lie and it is said that the person is morally bad.