Which of the following is NOT likely to occur when a bank fails?
A) Everyone that deposits money in the bank loses all or a portion of their money,unless the country has a functioning deposit insurance system.
B) The loss of savings (or the feared loss of savings) causes households to cut back on consumption,which spreads the recessionary effect wider through the country.
C) Unaffected banks may stop making loans as they take a cautious approach,slowing or stopping new investment.
D) Layoffs occur and the economy falls deeper into a downward spiraling inflation.
E) Other banks make too many loans to make up for the loans not made by the failed bank,kicking off a cycle of stimulation and inflation.
Correct Answer:
Verified
Q4: When expansionary fiscal and monetary policies are
Q5: Deficits financed by borrowed money lead to
Q8: The most common type of macroeconomic imbalance
Q12: An exchange rate crisis may lead to
Q14: A flexible exchange rate system guarantees a
Q15: A flexible exchange rate system crisis involves
A)a
Q17: All of the following are possible outcomes
Q21: Which of the following was NOT a
Q30: It is normal and typical in a
Q72: If governments promise to bail out the
Unlock this Answer For Free Now!
View this answer and more for free by performing one of the following actions
Scan the QR code to install the App and get 2 free unlocks
Unlock quizzes for free by uploading documents