Enrico banks at a commercial bank that advertises its...

Enrico banks at a commercial bank that advertises its membership in the FDIC. This means that Group of answer choices the bank guarantees it will pay the highest possible interest rate on his savings. his money is insured by an independent agency of the federal government. his money is automatically invested in securities issued by the federal government. the bank is a member of a larger consortium of banks that will enable Alfredo to cash checks and obtain basic bank services in virtually any major city in the United States.

Transcript

00:01 So here we're asked to contrast the fdic, the federal deposit insurance corporation and the federal reserve system to understand what the fdic does.

00:11 And we're given four options.

00:13 The first one here is manages interest rates.

00:15 This is wrong.

00:16 This is actually the job of the fed.

00:18 The fed are the people who are in charge of monetary policy.

00:21 They decide the prevailing interest rates in the financial system through their mandate to manage the supply of money.

00:30 And interest rates.

00:31 B, ensures retail deposits to dull incentives for depositor runs.

00:35 This is precisely what the fdic is doing, and this is the right answer.

00:41 The federal, and it's in the name, right, federal deposit insurance corporation, insures deposits.

00:45 The federal deposit insurance corporation was instituted in the great depression to prevent retail depositors, regular people on main street from taking their funds out of the bank in a panic.

00:57 And the idea is very simple.

00:59 If you are scared about the financial system, you might run to the bank and take your money out.

01:04 And when everyone does that and takes all the money out of the bank, the bank collapses and now the economy has bigger problems than when it started.

01:11 But if you know that your bank is protected by deposit insurance, then you don't run to the bank...

Question

Please give Ace some feedback