Podcast
Questions and Answers
Why are banks one of the most-regulated industries in the US?
Why are banks one of the most-regulated industries in the US?
- To protect depositors and maintain financial stability (correct)
- To discourage people from using banks
- To ensure fair competition among banks
- To increase profits for banks
What is a bank run?
What is a bank run?
- When banks refuse to lend money to customers
- When many depositors demand their deposits back at the same time (correct)
- When banks close their doors permanently
- When banks demand repayment from borrowers
Why is a bank run a problem in a fractional reserve system?
Why is a bank run a problem in a fractional reserve system?
- Banks don't have enough branches to handle the demand
- Banks don't have enough physical cash to give to depositors
- Banks don't have enough borrowers to lend money to
- Banks don't have enough reserves to cover all withdrawals (correct)
What is the role of a lender of last resort in mitigating the problem of bank runs?
What is the role of a lender of last resort in mitigating the problem of bank runs?
What is deposit insurance?
What is deposit insurance?
Why do banks need to have enough reserves to cover all withdrawals in a fractional reserve system?
Why do banks need to have enough reserves to cover all withdrawals in a fractional reserve system?
What is the purpose of a banking holiday?
What is the purpose of a banking holiday?
What is the role of deposit insurance in mitigating the problem of bank runs?
What is the role of deposit insurance in mitigating the problem of bank runs?
What are capital requirements for banks?
What are capital requirements for banks?
What is the role of a lender of last resort in mitigating the problem of bank runs?
What is the role of a lender of last resort in mitigating the problem of bank runs?
Flashcards
Bank Regulation
Bank Regulation
Rules and laws to protect depositors and ensure financial stability.
Bank Run
Bank Run
Many depositors withdrawing their money at once.
Fractional Reserve System
Fractional Reserve System
Banks only keep a portion of deposits in reserve.
Lender of Last Resort
Lender of Last Resort
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Deposit Insurance
Deposit Insurance
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Bank Reserves
Bank Reserves
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Banking Holiday
Banking Holiday
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Capital Requirements
Capital Requirements
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Preventing Bank Runs
Preventing Bank Runs
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Fractional Reserve System Problems
Fractional Reserve System Problems
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