In the context of banking regulation, the Capital Adequacy Ratio is prescribed to:
A. Fix the CRR level
B. Determine the interest rate on deposits
C. Determine the dividend payout
D. Ensure banks maintain sufficient capital relative to risk-weighted assets
Answer: Option D
Solution (By JKSSB Mock Tests)
Capital Adequacy Ratio (CAR) requires banks to hold a minimum amount of capital in proportion to their risk-weighted assets to absorb potential losses and protect depositors.
Explanation:
According to Keynes, the level of effective demand (where aggregate demand equals aggregate supply) determines the equilibrium level of employment and output.
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