If Deposits Move Money from Their Checking Account to Short-Term

question 74

Multiple Choice

If deposits move money from their checking account to short-term CDs, this would ____ the rate-sensitivity of the savings institution's liabilities to interest rate movements.

• A)increase
• B)have no effect on
• C)decrease
• D)A or C, depending on the size of the savings institution

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Definitions:

Materials

The substances or components used in the production of goods or in the execution of services.

Total Costs

The sum of all expenses incurred in the production of goods or services, including fixed and variable costs.

Variable Costs

Costs that vary directly with the level of production or output, for example, materials and labor costs used in manufacturing.

Accounting Profit

The net income of a company calculated by deducting all operational and overhead costs from total revenue, according to generally accepted accounting principles.