If Interest Rates on Both Assets and Liabilities Rise by 2

question 99

Multiple Choice

If interest rates on both assets and liabilities rise by 2 percent in the next 90 days,what should happen to this bank's net interest margin?

• A)It should fall by 2 percent.
• B)It should fall by 0.5 percent.
• C)It should fall by 4 percent.
• D)It should fall by 1 percent.
• E)It should not record any fall.

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Definitions:

Total Cost Curve

A graphical representation that shows the total cost of producing different levels of output, illustrating how costs change with production volume.

Marginal Cost Curve

A graphical representation that shows how the cost of producing one additional unit of a good varies as the quantity of the good produced changes.

Average Fixed Cost Curve

A graphical representation showing the average fixed cost per unit of output, which decreases as production increases due to spreading fixed costs over more units.

Total Variable Cost Curve

A graphical representation depicting how the total variable costs of producing a good changes with the level of output.