Which Two of the Following Statements Apply to a Hire

question 27

Multiple Choice

Which two of the following statements apply to a hire purchase agreement?

• A) There is an option or an automatic right to purchase the goods at the end for a nominal or zero final payment.
• B) The rate of repayment is at the discretion of the purchaser.
• C) Ownership of the goods rests with the purchaser throughout the lease.
• D) It is an agreement to hire goods for a specified period.

---

Definitions:

Adverse Selection

A situation in insurance and markets where higher-risk individuals are more likely to select and use insurance or services, potentially leading to market inefficiencies.

Externalities

Economic side effects or consequences that affect uninvolved third parties; can be positive or negative.

Diminishing Utility

A principle in economics that as consumption of a good or service increases, the marginal utility derived from each additional unit decreases.

Fed

Short for the Federal Reserve, which is the central banking system of the United States, responsible for monetary policy.