Life insurance companies, because of the __________-term nature of their liabilities, prefer to hold __________-term assets
A) long; long
B) long; short
C) short; long
D) short; short
A
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If a price ceiling is imposed, then:
a. the market supply curve will shift to the right. b. the market demand will shift to the left. c. a shortage of product will result. d. the government would be required to buy-up the surplus product. e. the market equilibrium price is below the level the government wishes to achieve.
The difference between M1 and M2 is significant. Which of the following best describes the difference? a. M1 is nearly three times as large as M2
b. M2 is made up mostly of demand and checkable deposits. c. M2 is substantially larger than M1. d. None of the above.
Which of the following is true of the federal funds rate? a. An increase in the federal funds rate leads to an increase in other interest rates too
b. A decrease in the federal funds rate leads to an increase in other interest rates. c. A decrease in the federal funds rate discourages banks from lending funds to other banks. d. A decrease in the federal funds rate discourages banks from giving loans to the public.
Refer to the above figure. Suppose the relevant aggregate demand curve is AD2. If the government wants to use fiscal policy to close the existing gap, it should
A. decrease taxes. B. increase taxes. C. increase the money supply. D. increase government spending.