If Bank a Has a Negative Gap and Bank B

question 2

Multiple Choice

If Bank A has a negative gap and Bank B has a positive gap, which of the following is true?

• A)Bank A is favorably affected by rising interest rates.
• B)Bank B is favorably affected by falling interest rates.
• C)Bank A is adversely affected by falling interest rates.
• D)None of these are correct.

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Definitions:

Classical

Pertains to economic theories and models that emphasize free markets, competition, and the self-regulating nature of economies, first developed in the 18th and 19th centuries.

Wages

Payments made to workers or employees as compensation for their labor or services.

Prices

The monetary value assigned to goods and services, determined by various factors including supply and demand dynamics.

Institutional Barriers

Obstacles created by cultural, legal, and organizational structures that hinder the progress or implementation of policies or operations.