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:

Specific Identification Method

An inventory costing method that tracks the actual cost of each specific item in inventory until it is sold.

Equity Method

An accounting technique used for recording investments in associate companies where the investment is initially recognized at cost and adjusted thereafter for the post-acquisition change in the investor’s share of the investee’s net assets.

Journal Entries

The method by which all business transactions are recorded in a company's accounting system, using debits and credits.

Other Comprehensive Income

Portions of total comprehensive income of a company not realized in net income, including items like foreign currency translation adjustments or unrealized gains on securities.