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.

Question

Quizplus · Accepted Answer

Lower interest rates reduce the debt-servicing burden of households, which in turn increases their net worth by reducing their liabilities. This is known as the balance sheet channel.

Lower Interest Rates Which Reduce the Debt-Servicing Burden of Households