FIs Are Particularly Vulnerable to Sudden and Unexpected Demand for Funds.Liquidity

question 40

Multiple Choice

FIs are particularly vulnerable to sudden and unexpected demand for funds.Liquidity regulations are imposed for all of the following reasons, except to:

• A)ensure that authorised DIs have sufficient liquidity
• B)prevent liquidity problems and possible contagion effects that may spread to other FIs
• C)increase liquidity for prudential management
• D)ensure that authorised DIs have sufficient capital

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Definitions:

Direct Variable Costs

These costs vary directly with the level of production output, such as materials and labor, and are essential for calculating a product's profitability.

Product Costs

Expenses directly associated with the production of goods or services, including labor, materials, and overhead costs.

Break-Even Cost

The amount of revenue needed to cover the total fixed and variable costs of producing and selling a product, with no profit or loss.