The Difference Between the Interest Rate on Loans to Households

question 85

Multiple Choice

The difference between the interest rate on loans to households and firms and the rate on completely safe assets is known as ________.

• A)the discount rate
• B)the FICO score
• C)the credit spread
• D)the prime rate

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Definitions:

Set Aside

To reserve or earmark funds or resources for a specific purpose, often used in legal, financial, or planning contexts.

Company Expansion

Strategies and actions undertaken by a company aimed at growing its business operations and market presence.

Purchased Price

The amount of money that has been paid to buy an asset, item, or service.

Compounded Annually

This refers to the process of earning interest on both the initial principal and the accumulated interest from previous periods, calculated once a year.