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Which of the following is INCORRECT regarding the regulation of the financial system? A) The purpose...

Which of the following is INCORRECT regarding the regulation of the financial system?

A) The purpose of deposit insurance is to discourage bank runs that create instability.

B) All U.S. depository institutions are regulated by a single institution (the Federal Reserve System).

C) Financial innovation poses a challenge in that it may be difficult for regulators to create/enforce laws to deal with new financial instruments.

D) There is often a tradeoff between stricter regulation of the financial system and the profitability of financial institutions.

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C) Financial innovation poses a challenge in that it may be difficult for regulators to create/enforce laws to deal with new financial instruments.- is correct

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