Question

Macroprudential supervision policies try to prevent a leverage cycle by changing capital requirements so that they ________ during an expansion and ________ during a downturna) decrease; decrease b) increase; increase c) increase; decrease d) decrease; increase

Answer 1

c) increase; decrease

Step-by-step explanation:

Macro prudential policies or regulations basically aim for company's entire financial risk management. This tries to regulate the risk by various steps and measures.

In the given case also,

By increasing the capital requirements during the expansion because expansion would result in great performance and that decreasing the capital requirements during the down turn as the performance would not be good.