Some critics argue that under the current deposit insurance regulations, neither insured depositors nor uninsured depositors have sufficient incentives to discipline riskier DIs. Explain why
Q: market demand
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- Bank runs are often described as self-fulfilling prophecies. Why is this phrase appropriate to bank runs?Given the danger of bank runs, why do banks not keep the majority of deposits on hand to meet the demands of depositors?The major protection against a sudden massattempt to withdraw cash from banks is thea. Federal Reserve.b. Consumer Protection Act.c. deposit insurance provided by the FDIC.d. gold and silver backing the dollar.
- Bank Balance Sheet Assets Liability and Equity Required Reserves: $ 0.30 million Deposits: $ 1.50 million Excess Reserves: $ 1.80 million Equity: $ 1.50 million Government Bonds: $ 0.90 million There are 100 banks in the kingdom total, all of them with completely identical balance sheets as Typical Bank. People in our kingdom also hold an additional $10 million in cash. That means that (demand) deposits in our kingdom total how much? ______ MillionExplain the the four principal tools used by Bank of Ghana formonetary policy, stating clearly how they are applied.Question 1) Explain what will happen to M1 and M2 measures of money supply if an individual moves money from demand deposit account to a small-denomination time deposit. Question 2) Issuing marketable securities is the primary way businesses finance their operations. Trueor false? Explain your answer. If a four-year bond with a $2000 face value has a coupon rate of 2.5%, and the currentmarket interest rate is 4%, what is the market price of the bond? If this bond sold for $1900, is theyield to maturity greater or less than 4%? Why?
- The U.S. Federal Reserve responded to the 2020 COVID-19 lockdowns by implementing an expansionary monetary policy, causing M2 money supply to rise from $15.3trillion in December 2019 to $18.3 trillion in July 2020. Over the same period, real GDP fell by 5.1 percent. a) Assuming that the velocity of money was constant over this period, what should the inflation rate be, based on the quantity equation? Show your work(S1) Banks charge larger bid/ask spreads than they would on less liquid, less traded currencies. (S2) At any given point in time, a bank's bid quote will be greater than its ask quote.A. Statement 1 is true.B. Statement 2 is true.C. Both statements are true.D. Both statements are false.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? please do cite ....
- Over the last 10 years the Federal Reserve has substantially changed the way itoperates. What is different about how the Federal Reserve now conducts policy? a) It is more secretive about interest rate and other policy changes b) it gives the public forward guidance on what it will do c) it places fewer regulations on commercial banks d) it discuesses its policy in public and asks for guidance from CongressWhat is Domestic Systemically Important Bank (D-SIB) and Global Systemically Important Bank (G-SIB) ? How the mechanism of both ? Explained with comprehensiveOn the one hand, the Federal Deposit Insurance Reform Act of 2005 expanded the? adverse selection or moral hazard. risks associated with deposit insurance by increasing limits for insured retirement deposits and indexing limits for other deposits to inflation. On the other hand, the law granted the FDIC greater discretion to assess risk-based deposit insurance? premiums or subsidies. intended to restrain? moral hazard or adverse selection