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.
Correct Answer:
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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
Q55: Banks in the Diamond-Dybvig model can offer
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)
Q166: What are the costs of inflation?
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