Ch 10 q.docx - Ch 10 Economic Analysis of Financial...

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Ch 10 Economic Analysis of Financial Regulation 1. Why are deposit insurance and other types of government safety nets important to the health of the economy?
2. If casualty insurance companies provided fire insurance without any restrictions, what kind of adverse selection and moral hazard problems might result?
3. Do you think that eliminating or limiting the amount of deposit insurance would be a good idea? Explain your answer.
4. How could higher deposit insurance premiums for banks with riskier assets benefit the economy?
5. What are the costs and benefits of a too-big-to-fail policy?

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