The Bank Lending Channel

question 24

Multiple Choice

The bank lending channel

• A) emphasizes the role of interest rates in the money supply process.
• B) emphasizes the importance of borrowers' net worth to the decision of lenders to grant loans.
• C) emphasizes the behavior of bank-dependent borrowers.
• D) is another name for the interest rate channel.

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Definitions:

Negative Reinforcement

A behavioral principle where the removal of a negative condition strengthens a desired behavior.

Desirable Stimulus

A stimulus that elicits a positive response due to its appealing nature.

Negative Reinforcement

A behavioral principle where the removal of an unpleasant stimulus strengthens a desired behavior.

Punishment

A process where an undesired behavior is followed by a consequence, typically reducing the likelihood of that behavior occurring again.