Changes in net worth and liquidity may significantly affect the volume of lending and economic activity according to the
A) interest rate channel.
B) balance sheet channel.
C) money channel.
D) bank lending channel.
Increases in interest rates
A) reduce borrowers' net worth.
B) reduce lenders' net worth.
C) increase the present value of borrowers' assets.
D) raise the cost to businesses of internal funding.
Monetary policy can have substantial effects on the economy even when nominal interest rates are very low
A) since real rates are what affect borrowing and spending decisions.
B) by improving borrower and bank balance sheets.
C) by reducing transactions costs.
D) only when the policy is substantial.
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.