If You Lend for 3 Months and Borrow for 6

question 491

Multiple Choice

If you lend for 3 months and borrow for 6 months, you may be said to:

• A) Be over-lent
• B) Have a negative gap
• C) Be exposed to higher interest rates
• D) Be over-borrowed

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Definitions:

Long-Run Price

The price level at which economic forces such as supply and demand are balanced over a longer time frame, considering all inputs are variable.

Output

The amount of goods or services produced by a business, industry, or economy within a given period.

Perfectly Competitive Industry

A perfectly competitive industry is a market structure where many firms offer identical products, there are no barriers to entry or exit, and each firm has no influence over the market price.

Economic Profit

The distinction between overall income and all expenses, encompassing both direct and assumed costs.