All of the following are examples of the law of diminishing control that followed banking regulations put in place after the Great Depression except:
A)banks created new instruments to circumvent the law.
B)financial business migrated to unregulated institutions.
C)depositors demanded financial institutions be responsible for their financial decisions.
D)politicians were pressured to dismantle the regulations.

Question

Quizplus · Accepted Answer

The law of diminishing control refers to the phenomenon where attempts to regulate an industry lead to the industry finding ways around those regulations. Choices A, B, and D are examples of this, as they describe ways in which the banking industry and its regulators responded to circumvent or dismantle regulations. Choice C, however, does not fit this pattern as it describes an expectation from depositors rather than an action taken by banks or politicians to diminish regulatory control.

All of the Following Are Examples of the Law of Diminishing