Which one of the following is presently a major deterrent to bank panics in the United States?
A) the legal reserve requirement
B) the fractional reserve system
C) the gold standard
D) deposit insurance

Question

Quizplus · Accepted Answer

Deposit insurance, which is provided by the Federal Deposit Insurance Corporation (FDIC), is presently a major deterrent to bank panics in the United States. It guarantees that depositors will be reimbursed up to a certain amount (currently $250,000 per account) in the event that a bank fails or becomes insolvent, which helps instill confidence and prevent runs on banks. The legal reserve requirement and fractional reserve system are regulatory mechanisms that set minimum reserve levels for banks, but they are not necessarily effective deterrents against bank panics. The gold standard is no longer used in the United States.

Which One of the Following Is Presently a Major Deterrent