The Bank Has a Negative Maturity Gap

question 34

Multiple Choice

The bank has a negative maturity gap.Is the bank exposed to interest rate increases or decreases and why?

• A)Interest rate increases because the value of its assets will rise more than its liabilities.
• B)Interest rate increases because the value of its assets will fall more than its liabilities.
• C)Interest rate decreases because the value of its assets will rise less than its liabilities.
• D)Interest rate decreases because the value of its assets will fall more than its liabilities.

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Definitions:

Seller's Cost

The total expenses incurred by a seller in producing and selling a product, including manufacturing, labor, and material costs.

Tax Per Unit

A fixed amount of tax imposed on a product or service, regardless of its selling price.

Producer Surplus

The divergence between what producers are prepared to agree on for a sale of goods or services and the resultant financial gain.

Consumer Surplus

represents the difference between what consumers are willing to pay for a good or service and what they actually pay, indicating economic welfare.