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The government provides insurance for individuals’ bank deposits, but

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The government provides insurance for individuals’ bank deposits, but  [#permalink]

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New post 21 Jan 2020, 09:34
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C
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E

Difficulty:

  25% (medium)

Question Stats:

82% (01:48) correct 18% (02:19) wrong based on 60 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 one of the following principles, if established, would do most to justify drawing the conclusion of the argument on the basis of the reasons offered in its support?


(A) The people who stand to benefit from an economic service should always be made to bear the costs of that service.

(B) Any rational system of insurance must base the size of premiums on the degree of risk involved.

(C) Government-backed security for investors, such as bank depositors, should be provided only when it does not reduce incentives for investors to make responsible investments.

(D) The choice of not accepting an offered service should always be available, even if there is no charge for the service.

(E) The government should avoid any actions that might alter the behavior of corporations and individuals in the market.

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Re: The government provides insurance for individuals’ bank deposits, but  [#permalink]

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New post 29 Jan 2020, 08:30
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It says since govt makes banks pay the premium on securing my account and i stand to benefit if something goes wrong with the bank then I should pay for the benefit i am enjoying and bank is paying the price. Option A clearly says one should pay for service if one stands to gain from that service. Option A is the answer. This is easy. 35 sec question i would say.
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Re: The government provides insurance for individuals’ bank deposits, but   [#permalink] 29 Jan 2020, 08:30
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