Chapter 10, Problem 1Q

To determine

The importance of the government safety net and its types such as deposit insurance in the economy of the country.

Concept Introduction:

Government Safety Net: For the purpose of providing assistance to the low-income level Americans, the government has taken necessary steps such as special programs to provide the basic requirements such as housing facilities and food.

Deposit Insurance: To reduce the uncertain scenarios of the depositors, the deposit insurance is one of the concepts being introduced in the banking sector. Banks could repay the debts to the depositors even when they are subjected to loss. It is an insurance which guarantees depositors and creditors to repay their amount in case of bank failure.