STATATATAT

1. Moral hazard exists when regulating banks because we have to but we don't want to A) stop bank failures from spreading; encourage banks to take too may risks B) rescue banks that are in trouble; discourage banks from taking potentially-profitable risks C) discourage banks from taking potentially-profitable risks; rescue banks that are in trouble D) stop bank failures from spreading; rescue banks that are in trouble 2. Which of the following is NOT the same as the others? A) Savings account B) Demand deposit C) Checking account D) Transactions deposit 3. One way to manage market risk is for a bank to: A) reduce the amount of reserves and vault cash it holds. B) offer variable rate loans and mortgages. C) assess the creditworthiness of borrowers. D) stop lending money and hold all deposits as bonds and securities. 4. Which of the following does NOT address the issue of banks taking on too much risk? A) Supervision and regulation of banks B) Deposit insurance C) Pooling and securitization of loans D) The Fed's role as lender of last resort 5. Systemic risk exists because: A) banks use depositor's money to make loans. B) banks are connected in a lot of ways. C) there is a lack of quantifiable information. D) banks use depositor's money to buy securities