When Fully Implemented, Basel III Will Increase the Quantity and Quality

question 43

Multiple Choice

When fully implemented, Basel III will increase the quantity and quality of capital held by banks by:

• A)decreasing the CAR but increasing the amount of 'tier 1' equity capital
• B)decreasing the CAR but increasing the amount of 'tier 2' equity capital
• C)increasing the CAR and the amount of 'tier 2' equity capital
• D)increasing the CAR and the amount of 'tier 1' equity capital
• E)increasing the CAR and the amount of 'tier 1' and 'tier 2' equity capital.

---

Definitions:

Elasticities of Demand

A measure of how much the quantity demanded of a good responds to a change in price, indicating the sensitivity of consumers to price changes.

Economic Incentive

A financial or material benefit that motivates individuals or businesses to act in certain ways or pursue particular courses of action.

Price Discrimination

A method of pricing in which a provider charges different prices for virtually identical goods or services in different market areas.

Electric Heating

A system of converting electric energy into heat for warming indoor spaces, typically regarded as more efficient than traditional heating methods.