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    Financial System and the Economy Principles
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    Exam 11: Financial Instability and Strains on the Financial System
  5. Question
    What Problem Occurs When FDIC-Insured Banks Make Riskier Loans Than
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What Problem Occurs When FDIC-Insured Banks Make Riskier Loans Than

Question 17

Question 17

Multiple Choice

What problem occurs when FDIC-insured banks make riskier loans than they would if they did not have deposit insurance?


A) lower rate of returns
B) moral hazard
C) negative cash flows
D) resource allocation

Correct Answer:

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