One of the Problems in Conducting a Duration Gap Analysis

question 59

Multiple Choice

One of the problems in conducting a duration gap analysis is that the duration gap is calculated assuming that interest rates for all maturities are the same. That means that the yield curve is

• A)flat.
• B)slightly upward sloping.
• C)steeply upward sloping.
• D)downward sloping.

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Definitions:

Potential GDP

The maximum possible level of output an economy can achieve when all resources are utilized efficiently, without causing inflation.

Prices

The amount of money required to purchase goods or services, acting as a signal in the market to influence supply and demand.

Natural Level of Employment

The rate of employment where the labor market is in equilibrium, with no cyclical unemployment.

Prolonged Unemployment

Prolonged unemployment refers to an extended period during which an individual remains jobless despite actively seeking employment, often leading to significant economic and psychological consequences.