Since most banks have positive gaps and negative duration gaps, an increase in market interest rates will
A) increase bank profits and increase bank capital.
B) increase bank profits and decrease bank capital.
C) decrease bank profits and increase bank capital.
D) decrease bank profits and decrease bank capital.
D
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If the market wage rate increases, a firm's labor demand curve does not shift but the labor supply curve shifts to the right
Indicate whether the statement is true or false
Whether real seignorage revenue increases when the rate of money growth increases depends on whether
A) the rise in real money holdings outweighs the decline in inflation. B) the rise in inflation outweighs the decline in real money holdings. C) the rise in inflation ratio outweighs the decline in the real supply of currency. D) the rise in the real supply of currency outweighs the decline in inflation.
Payroll tax puts a wedge between the wages firms pay and the wages workers earn due to ______.
a. which party the tax is levied against b. the inelasticity of supply relative to demand c. whether the supply or demand curve is shifted d. the fact that firms essentially pay the tax twice
If the government decides to levy an ad valorem tax on product with a perfectly inelastic supply. The consumers tax incidence will be
A) 0 B) 1 C) .5 D) Cannot be determined.