If Congress decreases the amount of government insurance on bank deposits, then this action would:

Question

Quizplus · Accepted Answer

Decreasing the amount of government insurance on bank deposits would reduce the moral hazard problem. With less government insurance, banks would have less of a safety net if they engage in risky behavior. Therefore, they would be less likely to engage in such behavior, reducing the moral hazard problem.

If Congress Decreases the Amount of Government Insurance on Bank