The Purpose of the Countercyclical Buffer Proposed by Basel III

question 33

Multiple Choice

The purpose of the countercyclical buffer proposed by Basel III is to

• A)expose those banks with inadequate capital to survive economic downturns.
• B)assist insolvent banks build capital during economic expansions.
• C)protect the banking system and reduce systematic exposures to economic downturns.
• D)enhance global movement of funds to those countries experiencing excess aggregate credit growth.
• E)force DIs to immediately adjust capital to meet the 2.5 percent level of buffer capital required.

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Definitions:

Machine-Hours

A measure of production volume in terms of the total hours machines are operated in the manufacturing process.

Departmental Predetermined Rates

Rates used to allocate departmental overhead costs, established in advance based on expected costs and activity levels.

Machine-Hours

A measurement unit representing the operational time of a machine, typically used in manufacturing to allocate costs based on usage.

Selling Price

Selling Price is the amount a buyer pays to purchase an item or service from a seller.