Q21 · Practice questionComplex familiar1 mark
QUESTION 21
A rate rise increases a household’s mortgage interest bill by $180 a month. The household reduces discretionary purchases. This most directly illustrates the
(A)
cash-flow channel.
(B)
capital-gains-tax channel.
(C)
labour-productivity channel.
(D)
government-expenditure channel.
WORKED SOLUTION
1 markAnswer A
Answer
A
Working
Higher debt servicing reduces cash available for consumption. The immediate mechanism is household cash flow, not a direct change in government spending or productivity.
Marking criteria
- Select A. [1 mark]
Practice question aligned to the current QCAA syllabus; review the worked solution and marking criteria.
View the QCAA syllabus