Bank Regulators Impose Capital Requirements in Order to

question 369

Multiple Choice

Bank regulators impose capital requirements in order to

• A)increase the amount of leverage in the economy.
• B)provide an incentive for banks to hold risky assets.
• C)ensure banks can pay off depositors.
• D)increase the probability of a credit crunch.

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Definitions:

Net Income

What a business financially gains in the end, after subtracting expenses and taxes from its initial revenue.

Capital Balances

Capital balances refer to the amount of money that the owners or partners have invested in a business, not including any profits or losses that the business may earn or incur.

Net Income

The amount of money that remains from revenues after all expenses, taxes, and costs have been subtracted.

Devotes Full Time

A commitment by an individual or employee to allocate all of their working hours to a specific job or task.