Bank depositors in US are all financially protected against bank failure because the government insures all individuals' bank deposits.An economist argues that this insurance is partly responsible fir 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 depositors' money.
45.The economist's argument makes which of the following assumptions?
(A) Bank failures are caused when big borrowers default on loan repayments.
(B) A significant proportion of depositors maintain accounts at several different banks.
(C) The more a depositor has to deposit,the more careful he or she tends to be in selecting a bank.
(D) The difference in the interest rates paid to depositors by different banks is not significant factor in bank failures.
(E) Potential depositors are able to determine which banks are secure against failure.
I want to select the answer,(C),however,the correct one is (E).Please help to explain why the answer is (E),not (C).
46.Which of the following,if true,most seriously weakens the economist's argument?
(A) Before the government started to insure depositors against bank failure,there was a lower rate of bank failure than there is now.
(B) When the government did not insure deposits,fruquent bank failures occurred as a result of depositors' fears of losing money in bank failures.
(C) Surveys show that a significant proportion of depositors are aware that their deposits are insured by the government.
(D) There is a upper limit on the amount if an individuals' deposit that the government will insure,but very few individuals' deposits exceed the limit.
(E) The security of a bank against failure depends on the percentage of its assets that are loaned out and also on how much risk its loan involve.
Why the answer is (B)? I selected the answer,(A).
Thank you a lot.