A positive gap implies that an increase in interest rates will cause _______ in net interest income.
A)no change
B)a decrease
C)an increase
D)an unpredictable change
E)no change or a decrease.

Question

Quizplus · Accepted Answer

A positive gap means that the bank's assets are earning higher interests than its liabilities. Therefore, an increase in interest rates will cause an increase in net interest income for the bank.

A Positive Gap Implies That an Increase in Interest Rates