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In a Bank Run, the Equilibrium Deposit Contract in the Diamond-Dybvig

Question 60

Multiple Choice

In a bank run, the equilibrium deposit contract in the Diamond-Dybvig model


A) makes both early and late consumers better off.
B) makes early consumers no better off and makes late consumers worse off.
C) makes early consumers worse off and makes late consumers better off.
D) makes both early consumers and late consumers worse off.
E) provides an illiquidity transformation service to consumers.

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