The correct option that defines the banking regulations.
Answer to Problem 3MCQ
Option e is correct.
Explanation of Solution
Explanation for correct option:
a.
There are various banking regulations in order to ensure that bank run out does not occur. Deposit insurance is a type of insurance that bank needs to get cover under. This will reduce the risk of depositors at the time of bank run. Therefore, option a is correct.
b.
Banks are required to keep certain assets as per the value of total deposits so that government can recover the loss from such assets at the time of bank run. Therefore, option b is correct.
c.
d.
Discount window is the window run by the government in order to ensure fair lending business of the bank. Therefore, option d is correct.
e.
Since, all of the above options are correct. Therefore, option e is correct.
Reserve requirement: The rules set by the Federal Reserve where banks are required to holder certain percentage of deposits or to main reserve as per mentioned reserve ratio can be referred as reserve requirement.
Chapter 25 Solutions
Krugman's Economics For The Ap® Course
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