A Decline in Borrower Net Worth

question 21

Multiple Choice

A decline in borrower net worth

• A)raises information costs, but increases the ability of households and firms to borrow.
• B)reduces information costs and increases the ability of households and firms to borrow.
• C)raises information costs and reduces the ability of households and firms to borrow.
• D)reduces information costs and reduces the ability of households and firms to borrow.

---

Definitions:

Depreciation

The process of allocating the cost of a tangible or physical asset over its useful life, reflecting wear and tear.

Adjustments

Corrections or changes made to the book balances of accounts to reflect more accurate values in financial accounting.

Payroll

The total amount of wages, salaries, and other earnings that a company pays to its employees.

Workweek

A fixed, standard period used for labor scheduling and payroll, commonly defined as a set number of hours or days that an employee works.