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The Flat-Rate Insurance Provided by the FDIC Has Two Faults

Question 5

Multiple Choice

The flat-rate insurance provided by the FDIC has two faults.First,it misprizes risk.Second,


A) it penalizes large thrifts by making them subsidize smaller ones by paying the same rate
B) it forces conservatively managed thrifts to subsidize those with more risky investments
C) it is not adjustable to reflect the actual market conditions that are met by commercial financial institutions
D) the rates are too high to be paid by a thrift without a large number of depositors

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