Banks Have a Maturity Mismatch Since

question 5

Multiple Choice

Banks have a maturity mismatch since

• A) they borrow long term, but lend short term.
• B) they borrow short term, but lend long term.
• C) some of their loans are short term while others are long term.
• D) some of their borrowings are short term while others are long term.

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Definitions:

General Theory

A broad and fundamental principle or set of principles intended to explain a major phenomenon or field of study.

Full Employment

The level of employment where all who are willing and able to work at current wage rates are employed; often considered an indication of an economy's health.

Industrial Economy

An economy characterized by significant industrial activity, often involving manufacturing and the production of goods.

Fine-Tuning

The process of making minor adjustments to monetary and fiscal policy to stabilize the economy, aiming to maintain steady growth and low inflation.