The Phenomenon of Hoarding Money When the Interest Rate Falls

question 167

Multiple Choice

The phenomenon of hoarding money when the interest rate falls to low levels is an outcome of

• A) the liquidity trap.
• B) the transactions demand for money.
• C) the precautionary demand for money.
• D) deflation.

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Definitions:

Revenue Accounts

Accounts that track money earned from a company's operations and activities, usually from the sale of goods and services.

Credits

Accounting entries that increase liabilities or decrease assets, representing the opposite of debits.

Debit

An accounting entry that increases an asset or expense account, or decreases a liability or equity account, on a company's balance sheet.

Credit

A bookkeeping record that raises either liabilities or equity or lowers an asset or expense.