Lower Interest Rates Which Reduce the Debt-Servicing Burden of Households

question 18

Multiple Choice

Lower interest rates which reduce the debt-servicing burden of households, thus increasing their net worth, is best described by the

• A)bank lending channel.
• B)money channel.
• C)financial market channel.
• D)balance sheet channel.

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Definitions:

Behavioral Economists

Researchers and practitioners in the field of behavioral economics who study how the psychological and social factors affect individuals' economic decisions.

Tiramisu

An Italian dessert featuring layers of coffee-soaked ladyfingers, mascarpone cheese, cocoa, and sometimes liquor.

Neoclassical Assumption

A perspective in economics that assumes individuals have rational preferences, markets are capable of reaching equilibrium, and information is symmetrically distributed.

System 1

A term often used in psychology and behavioral economics, referring to the brain's fast, automatic, and intuitive approach to decision-making.