In a Period When Interest Rates Are Expected to Rise

question 51

Multiple Choice

In a period when interest rates are expected to rise, ____ institutions will want a fixed-for-floating swap, and the fixed rate specified on interest rate swaps will be ____ under these conditions.

• A)many; lower
• B)many; higher
• C)few; lower
• D)few; higher

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Definitions:

Marginal Revenue

The additional revenue gained from selling one more unit of a good or service.

Marginal Product

The additional output resulting from employing one more unit of a particular input, keeping other inputs constant.

Optimal Employment

The level of employment where the marginal product of labor equals the real wage rate, maximizing efficiency and productivity in the use of labor resources.

Marginal Product

The additional output resulting from using one more unit of a production input, keeping all other inputs constant.