The table below shows different combinations of regulatory ratio adjustments for a commercial bank. All other things being equal, identify which one of the combinations is most likely to increase the bank's resilience to sudden financial crises.
| Liquidity ratio | Capital adequacy ratio | |
|---|---|---|
| A | Decrease | Increase |
| B | Increase | Decrease |
| C | Decrease | Decrease |
| D | Increase | Increase |
Decrease liquidity ratio, Increase capital adequacy ratio
Increase liquidity ratio, Decrease capital adequacy ratio
Decrease liquidity ratio, Decrease capital adequacy ratio
Increase liquidity ratio, Increase capital adequacy ratio
176 exam-style questions on AQA A Level Economics 2.4 Financial markets and monetary policy (A-level only), covering 2.4.1 The structure of financial markets and financial assets, 2.4.2 Commercial banks and investment banks, 2.4.3 Central banks and monetary policy, and 2.4.4 The regulation of the financial system. Each one has a worked solution and a mark scheme showing where the marks go.