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A common element in all of the banking crisis episodes in different countries is ____.
A) the existence of a government safety net
B) deposit insurance
C) increased regulation
D) lack of competition
Answer: A
Diff: 1 Type: MC Page Ref: 231
Skill: Recall
Objective List: 10.4 Banking Crises Throughout the World
In terms of international banking crises, deposit insurance ____.
A) was always a key factor
B) couldn't be implicated as it only exists in Canada
C) played a role in a few countries but wasn't consistently complicit
D) is considered to be the best response to financial instability
Answer: C
Diff: 1 Type: MC Page Ref: 231
Skill: Recall
Objective List: 10.4 Banking Crises Throughout the World
The cost of rescuing banks ranges from ____ to ____ percent of GDP.
A) 1; 57
B) 1; 11
C) 1; 13
D) 4; 57
Answer: A
Diff: 2 Type: MC Page Ref: 232
Skill: Recall
Objective List: 10.3 Examine CDIC Developments
Banking crises have occurred throughout the world. What similarities do we find when we
look at the different countries?
Answer: Financial deregulation with inadequate supervision can lead to increased moral hazard
as banks take on more risk. Although deposit insurance was not necessarily a major factor in
every country's bank crisis, there was always some kind of government safety net. The presence
of the government safety net also leads to increased risk-taking from the banks.
Diff: 2 Type: SA Page Ref: 246 - 247
Skill: Recall
Objective List: 10.4 Banking Crises Throughout the World