Banks in the Diamond-Dybvig model can offer depositors increased liquidity because
A) both individual depositors' liquidity needs and average depositor liquidity needs are predictable.
B) while individual depositors' liquidity needs are unpredictable, average depositor liquidity needs are predictable.
C) while individual depositors' liquidity needs are predictable, average depositor liquidity needs are unpredictable.
D) neither individual depositors' liquidity needs nor average depositor liquidity needs are predictable.
E) the bank only holds a small amount of illiquid assets.
Correct Answer:
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Q50: Which asset is most liquid?
A) a house
B)
Q51: The argument that deposit insurance can prevent
Q52: A depository institution can make highly illiquid
Q53: In a bank run in the Diamond-Dybvig
Q54: The phenomenon in which an insured individual
Q56: Moral hazard is a problem in providing
Q57: One characteristic of a financial intermediary is
Q58: The Diamond-Dybvig model provides an account of
A)
Q59: Examples of financial intermediaries include
A) insurance companies.
B)
Q60: In a bank run, the equilibrium deposit
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