In the context of banking regulation, the Capital Adequacy Ratio is prescribed to:
A. Determine the dividend payout
B. Fix the CRR level
C. Determine the interest rate on deposits
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:
The services sector is the largest contributor to India's GDP and has been a major driver of growth, particularly through IT, financial services, trade and tourism.
Explanation:
The Lucas Critique argues that the parameters of traditional econometric models are not policy-invariant because economic agents change their behaviour when policy rules change.
Explanation:
The law of demand does not hold for Giffen goods (where income effect outweighs substitution effect) and Veblen goods (where higher price increases demand due to prestige value).
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