About 40 jewls of power in the other direction
1) Banks hold excess and secondary reserves toA) reduce the interest-rate risk problem.
2) Which of the following statements most accurately describes the task of bank asset management?
b. Banks seek to have the highest liquidity possible subject to earning a positive rate of return on their operations.
3) The goals of bank asset management include
d. purchasing securities with high returns and low risk.
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Answer:
Option (B) is correct.
Explanation:
A recessionary gap is a situation in which the equilibrium level of real GDP is less than the full employment level. In this condition, the aggregate demand is lower and there is a shortage of aggregate demand. This shortage of aggregate demand will be corrected if there is an increase in the government spending or decrease in the taxes. This would increase the aggregate demand in the economy, and therefore, increase the real GDP and achieve the full employment level.
An inflationary gap occurs when the equilibrium level of real GDP is greater than the full employment level. There is a higher level of aggregate demand in the economy, so there is a need to lower down the government spending or to raise taxes in order to reduce the aggregate demand. This lower level of aggregate demand reduces the real GDP and achieve the full employment level.
Answer:
Nominal annual rate of interest(r) = 2.5% (Approx)
Explanation:
Given:
Present value (P) = $1,200
Future value (F) = $1,618.62.
Number of year = 1year = 12 months
Find:
Nominal annual rate of interest(r)
Computation:
Nominal annual rate of interest(r) =
Nominal annual rate of interest(r) =
Nominal annual rate of interest(r) = 0.02525
Nominal annual rate of interest(r) = 2.5% (Approx)