the federal deposit insurance corporation (fdic)\na. creates moral hazard problems in that big banks take on…

the federal deposit insurance corporation (fdic)\na. creates moral hazard problems in that big banks take on more risk than they otherwise would.\nb. was created in 1933 to prevent bank runs that had been plaguing the economy during the great depression.\nc. assures depositors that their deposits will be fully recoverable (up to a maximum of $250,000 per depositor per institution) regardless of how serious a banks financial situation may be.\nd. all of the above.

the federal deposit insurance corporation (fdic)\na. creates moral hazard problems in that big banks take on more risk than they otherwise would.\nb. was created in 1933 to prevent bank runs that had been plaguing the economy during the great depression.\nc. assures depositors that their deposits will be fully recoverable (up to a maximum of $250,000 per depositor per institution) regardless of how serious a banks financial situation may be.\nd. all of the above.

Answer

Brief Explanations:

  • Option A: With FDIC insurance, big banks may take on more risk as they know deposits are insured (moral hazard concept).
  • Option B: FDIC was indeed created in 1933 as part of New Deal legislation to prevent bank runs like those during the Great Depression.
  • Option C: FDIC insures deposits up to $250,000 per depositor per institution.

Since all A, B, and C are correct statements about FDIC.

Answer:

D. All of the above.