[Solved] Which of the following statements about financial regulation is TRUE? — Ans: It includes supervision of financial institutions to prevent systemic risks | Financial Awareness

Financial Awareness - Risk, Stability & Emerging Finance

Which of the following statements about financial regulation is TRUE?

AIt primarily focuses on setting government budgets

BIt includes supervision of financial institutions to prevent systemic risks

CIt controls the supply of money in the economy

DIt is responsible for managing foreign exchange reserves

Step-by-Step Solution

Step 1: Understand the scope of financial regulation
Financial regulation supervises institutions to prevent systemic risks and maintain stability.
Step 2: Analyze other options
Setting budgets is fiscal policy, controlling money supply is monetary policy, managing forex reserves is RBI's function but not financial regulation per se.
Final Answer:
It includes supervision of financial institutions to prevent systemic risks → Option B
Quick Check:
Financial regulation includes supervision to prevent systemic risks ✅

Quick Trick: Systemic risk prevention is key in regulation

Common Mistakes:

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