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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All of the following statements regarding the marginal revenue product (MRP) curve and the demand for labor are true EXCEPT
A) an individual firm's demand for labor is its MRP curve. B) under conditions of perfect competition, MRP equals marginal physical product multiplied by the product's price. C) an increase in the market demand for a given product decreases the product's price. D) the demand for labor is a derived demand.
To cause the interest rate to fall, the Fed can
a. decrease the money supply b. stabilize the money supply to increase investor confidence c. decrease the price of bonds d. increase the money supply e. increase the demand for money