Sometimes It May Be Better to Use Savings Rather Than

question 57

Multiple Choice

Sometimes it may be better to use savings rather than borrow to make a purchase.This would be recommended when

• A) the borrower has adequate savings.
• B) interest rates are rising.
• C) interest rates are falling.
• D) the cost of borrowing is greater than the interest earned on the savings.
• E) interest earned on savings is greater than the interest paid on the loan.

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Definitions:

Reasoning Errors

Reasoning errors are mistakes in logical thinking that occur when drawing conclusions or making decisions, often leading to incorrect or biased outcomes.

Overly Optimistic

Describes an excessively positive outlook on situations, often disregarding potential risks or negative outcomes.

Over-Confidence

A cognitive bias where an individual's belief in their own abilities or the prospects of a situation are excessively optimistic beyond what evidence supports.