Banks in the Diamond-Dybvig model can offer depositors increased liqui
Banks in the Diamond-Dybvig model can offer depositors increased liquidity because
A) both individual depositors’ liquidity needs and average depositor liquidity needs are predictable.
B) while individual depositors’ liquidity needs are unpredictable, average depositor liquidity needs are predictable.
C) while individual depositors’ liquidity needs are predictable, average depositor liquidity needs are unpredictable.
D) neither individual depositors’ liquidity needs nor average depositor liquidity needs are predictable.
ANSWER
B
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