Which of the following is a reason that banks are so heavily regulated?
A)Governments are concerned about the safety of deposits.
B)The industry is a principal determinant of aggregate demand.
C)Bank failures are contagious.
D)All of these responses are correct.

Question

Quizplus · Accepted Answer

All of these reasons are accurate. Governments want to ensure the safety of deposits to avoid bank runs and maintain stability in the financial system. Banks also play a significant role in the economy by lending money to businesses and individuals, affecting aggregate demand. Finally, if one bank fails, it can have a domino effect and cause other banks to fail, leading to widespread financial instability. All these reasons make banks a vital industry to regulate.

Which of the Following Is a Reason That Banks Are