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. This is an assumption type of question. The technique is negation. Conclusion of this argument is: depositors should 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. Negate: Banks are insured by the government against default on the loans the banks make. This had nothing to do with our conclusion. It’s out of scope.
(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. Negate: Banks 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. This weaken the conclusion that depositors should pay the premiums for insuring their own accounts because bank pay lower interest to depositor. Not + weaken, this is the assumption of this argument. |