Assuming All Else Equal,a Rise in the Rate of Interest

question 174

Multiple Choice

Assuming all else equal,a rise in the rate of interest ________.

• A) results in a fall in the cost of borrowing
• B) results in a fall in the quantity of credit demanded
• C) results in an increase in the number of potential debtors
• D) results in a fall in the amount of interest accumulated on a loan

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Definitions:

Cheques Clear

Refers to the process by which a bank verifies that the funds available in the account of the individual who wrote the cheque are sufficient to cover the amount, and subsequently moves those funds to the account of the cheque recipient.

Incremental Bad Debt

Additional losses expected from non-payment or default by borrowers beyond what was originally anticipated.

Bad Debt Losses

Financial losses a company incurs when it cannot collect payment from a borrower or customer.

Decline

A decrease in the value or quantity of something.