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# The government provides insurance for individuals' bank deposits

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The government provides insurance for individuals' bank deposits  [#permalink]

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11 Aug 2019, 01:21
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Difficulty:

35% (medium)

Question Stats:

100% (01:34) correct 0% (00:00) wrong based on 6 sessions

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The government provides insurance for individuals' bank deposits, but requires the banks to pay the premiums for the insurance. Since it is depositors who primarily benefit from the security this insurance provides, the government should take steps to ensure that depositors who want this security bear the cost of it and thus should make depositors pay the premiums for insuring their own accounts.

Which of the following is assumed by the argument?

A) Banks are not insured by the government against default on the loans the banks make.
B) Private insurance companies do not have the resources to provide banks or individual with deposit insurance.
C) Banks do not always cover the cost of the deposit-insurance premiums by paying depositors lower interest rates on insured deposits than the banks would on uninsured deposits.
D) The government limits the insurance protection it provides by insuring accounts up to a certain legally defined amount only.
E) The government does not allow banks to offer some kinds of accounts in which deposits are not insured.

Source: PrepTest 7, February 1993 LSAT, Section 4, Question 6
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Joined: 02 Sep 2009
Posts: 57281
Re: The government provides insurance for individuals' bank deposits  [#permalink]

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11 Aug 2019, 03:01
Xin Cho wrote:
The government provides insurance for individuals' bank deposits, but requires the banks to pay the premiums for the insurance. Since it is depositors who primarily benefit from the security this insurance provides, the government should take steps to ensure that depositors who want this security bear the cost of it and thus should make depositors pay the premiums for insuring their own accounts.

Which of the following is assumed by the argument?

A) Banks are not insured by the government against default on the loans the banks make.
B) Private insurance companies do not have the resources to provide banks or individual with deposit insurance.
C) Banks do not always cover the cost of the deposit-insurance premiums by paying depositors lower interest rates on insured deposits than the banks would on uninsured deposits.
D) The government limits the insurance protection it provides by insuring accounts up to a certain legally defined amount only.
E) The government does not allow banks to offer some kinds of accounts in which deposits are not insured.

Source: PrepTest 7, February 1993 LSAT, Section 4, Question 6

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Re: The government provides insurance for individuals' bank deposits   [#permalink] 11 Aug 2019, 03:01
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