The Diamond-Dybvig model
A) shows why illiquid assets are useful.
B) illustrates the role of moral hazard in banking.
C) shows how monetary policy can prevent banking crises.
D) shows that Keynesian fiscal policy is effective.
E) demonstrates how the banking system can be unstable.
Correct Answer:
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Q20: Banks in the Diamond-Dybvig model can offer
Q21: One characteristic of a financial intermediary is
Q22: A depository institution can make highly illiquid
Q23: Examples of financial intermediaries include
A)mutual funds.
B)stock exchanges.
C)financial
Q24: What is the role of deposit insurance,
Q25: An asset's liquidity depends upon
A)how long it
Q26: Moral hazard is a problem in providing
Q27: Which asset is most liquid?
A)a stock
B)a government
Q28: The maturity of a 30-year bond that
Q30: For assessing whether and how much of
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