Logout Open In App
Open In App
Warning: foreach() argument must be of type array|object, bool given in /var/www/html/web/app/themes/studypress-core-theme/template-parts/header/mobile-offcanvas.php on line 20

Chapter 15: Q. 15.5- Learning Objectives (page 322)

Explain the essential features of federal deposit insurance.

Short Answer

Expert verified

As of 2020, the Federal Deposit Insurance Corporation (FDIC) will protect deposits up to250,000 per depositor if the institution is a member business. Checking and savings accounts, certificates of deposit, money market accounts, revocable and irrevocable trust accounts, and employee benefit plans are all covered by the FDIC.

Step by step solution

01

Importance of Federal deposit Insurance.

The Federal Deposit Insurance Corporation is a non-profit organization that insures bank accounts and other assets in the United States in the event that financial institutions collapse. The FDIC was created to give consumers more trust in the health and well-being of the nation's financial system.

02

Features of Federal Deposit Insurance.

Premiums for depository institutions are calculated depending on the value of their deposits, with monies held in reserve in the event of a failed bank, allowing depositors to be reimbursed.

People believe they will be unable to utilize it to exchange goods and services in the future.

Unlock Step-by-Step Solutions & Ace Your Exams!

  • Full Textbook Solutions

    Get detailed explanations and key concepts

  • Unlimited Al creation

    Al flashcards, explanations, exams and more...

  • Ads-free access

    To over 500 millions flashcards

  • Money-back guarantee

    We refund you if you fail your exam.

Start your free trial

Over 30 million students worldwide already upgrade their learning with Vaia!

One App. One Place for Learning.

All the tools & learning materials you need for study success - in one app.

Get started for free

Most popular questions from this chapter

Define the functions of money, identify key properties that money must possess, and explain official definitions of the money supply

Determine the maximum potential extent that the money supply will change following a Federal Reserve monetary policy action.

Until 1946, residents of the island of Yap used large doughnut-shaped stones as financial assets. Although prices of goods and services were not quoted in terms of the stones, the stones were often used in exchange for particularly large purchases, such as livestock. To make the transaction, several individuals would insert a large stick through a stone's center and carry it to its new owner. A stone was difficult for any one person to steal, so an owner typically would lean it against the side of his or her home as a sign to others of accumulated purchasing power that would hold value for later use in exchange. Loans would often be repaid using the stones. Which of the functions of money did the stones perform?

The Federal Reserve purchases 1 million in U.S. Treasury bonds from a bond dealer, and the dealer's bank credits the dealer's account. The reserve ratio is 15percent. Assuming that no currency leakage occurs, how much will the bank lend to its customers following the Fed's purchase?

Match each of the rationales for financial intermediation listed below with at least one of the following financial intermediaries: insurance company, pension fund, savings bank. Fxplain your choices.

a. Adverse selection

b. Moral hazard

c. Lower management costs generated by larger scale
See all solutions

Recommended explanations on Economics Textbooks

Taxation Economics

Read Explanation
View all explanations

What do you think about this solution?

We value your feedback to improve our textbook solutions.

Study anywhere. Anytime. Across all devices.

Sign-up for free