Question

​G-20 Leaders Look to Shake off Lingering Economic Troubles

The​ G-20 aims to take stock of the economic recovery. One achievement in Pittsburgh could be a deal to require that financial institutions hold more capital.

The​ "capital" referred to in the news clip is​ ______.

The financial institutions that the​ G-20 might require to hold more capital are​ ______.

A.physical​ capital;
​government-sponsored mortgage lenders and pension funds
B.physical​ capital;
banks and insurance companies
C.the​ institutions' own​ funds;
​government-sponsored mortgage lenders and pension funds
D.the​ institutions' own​ funds;
banks and insurance companies

Answer 1

The 'capital' mentioned in the news clip refers to the institutions' own funds, and it is banks and insurance companies that the G-20 might require to hold more of this capital to enhance economic stability. Therefore, the correct option is D.

Step-by-step explanation:

The news clip refers to G-20 Leaders considering measures to ensure the stability of the global economy by requiring certain financial institutions to hold more capital. The term "capital" in this context means the institutions' own funds, which refers to the financial resources that banks and financial entities keep in reserve. These reserves are meant to act as a buffer to absorb potential losses, ensuring these institutions are more stable and less susceptible to economic downturns. By requiring institutions such as banks and insurance companies to hold more capital, the G-20 ideally seeks to prevent a repeat of the kind of financial instability observed during events like the Asian Financial Crisis of the late 1990s, where economies suffered a collapse due to rapid outflows of international financial capital.