Bank depositors in the United States are all financially protected against bank failure because
the government insures all individuals' bank deposits. An economist argues that this insurance is
partly responsible for the high rate of bank failures since it removes from depositors any financial incentive to find out whether the bank that holds their money is secure against failure. If depositors were more selective then banks would need to be secure in order to compete for dositors' money
45)The economist's argument makes which of the following assumptions?
(A) Bank failures are caused when big borrowers default on loan repaymentsı
(B) A significant proportion of depositors maintain accounts at several different banksı
(C) The more a deD0sitor has to deposit, the more careful he or she tends to be in selecting a
bankı
(D) The difference in the interest rates paid to depositors by different banks is not a
significant factor in bank failuresı
(E) Potential depositors are able to determine which banks are secure against failure
i have read the Power score CR bible and i am trying to apply those strategies for this question. I have the following questions -
My contender choices were B,C,D,E
I find that E is the best and most accurate assumption.
However, I am not completely convinced why the remaining are wrong. OG's explaination is vague.
especially for (D)(D) The difference in the interest rates paid to depositors by different banks is not a
significant factor in bank failuresı
I thought that the choice is a defender type, where its eliminating a possible avenue attack, where one could say that , the difference in interest rates paid to depositors is the reason some banks fail while others survive. Its sliminating an alternate reason. Hence this choice also passes Assumption negation. How should i know whether this choice constitutes a defender choice or is a superficial one just to trap the test taker.
If someone can explain me this problem in detail , it will help me attack these problems better as my accuracy is still not up to the mark in CR.
Someone please help.
the government insures all individuals' bank deposits. An economist argues that this insurance is
partly responsible for the high rate of bank failures since it removes from depositors any financial incentive to find out whether the bank that holds their money is secure against failure. If depositors were more selective then banks would need to be secure in order to compete for dositors' money
45)The economist's argument makes which of the following assumptions?
(A) Bank failures are caused when big borrowers default on loan repaymentsı
(B) A significant proportion of depositors maintain accounts at several different banksı
(C) The more a deD0sitor has to deposit, the more careful he or she tends to be in selecting a
bankı
(D) The difference in the interest rates paid to depositors by different banks is not a
significant factor in bank failuresı
(E) Potential depositors are able to determine which banks are secure against failure
i have read the Power score CR bible and i am trying to apply those strategies for this question. I have the following questions -
My contender choices were B,C,D,E
I find that E is the best and most accurate assumption.
However, I am not completely convinced why the remaining are wrong. OG's explaination is vague.
especially for (D)(D) The difference in the interest rates paid to depositors by different banks is not a
significant factor in bank failuresı
I thought that the choice is a defender type, where its eliminating a possible avenue attack, where one could say that , the difference in interest rates paid to depositors is the reason some banks fail while others survive. Its sliminating an alternate reason. Hence this choice also passes Assumption negation. How should i know whether this choice constitutes a defender choice or is a superficial one just to trap the test taker.
If someone can explain me this problem in detail , it will help me attack these problems better as my accuracy is still not up to the mark in CR.
Someone please help.
