Moral Hazard Is a Problem in Providing Deposit Insurance Because

Multiple Choice

Moral hazard is a problem in providing deposit insurance because insured banks are

A) more likely to make bookkeeping errors.
B) overly cautious due to extra regulations adopted by the Canada Deposit Insurance Corporation.
C) more likely to provide bank managers with lavish perquisites.
D) encouraged to take on more risk.
E) more likely to offer interest rates on loans that are greater than market interest rates.