The result of the too-big-to-fail policy is that ________ banks will take on ________ risks,making bank failures more likely.

Question

Quizplus · Accepted Answer

The too-big-to-fail policy gives the impression that large banks will be bailed out by the government in case of a failure, which reduces the perceived risks of these banks. This, in turn, leads big banks to take on greater risks because they feel protected by the government. Consequently, bank failures become more likely when large banks take on greater risks. Therefore, option D is the correct answer.

The Result of the Too-Big-To-Fail Policy Is That ________ Banks