Deposit insurance creates a moral hazard because it: a) eliminates depositors' incentives to monitor banks. b)...

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Deposit insurance creates a moral hazard because it: a) eliminates depositors' incentives to monitor banks. b) reduces the cost of a bank failure for depositors. c) encourages depositors to leave their funds in a weak bank. d) All of the answers are correct. Deposit insurance creates a moral hazard because it: a) eliminates depositors' incentives to monitor banks. b) reduces the cost of a bank failure for depositors. c) encourages depositors to leave their funds in a weak bank. d) All of the answers are correct.

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