The Substantial Increase in Household Debt Relative to Income Since

question 41

Multiple Choice

The substantial increase in household debt relative to income since the mid 1980s meant that in 2008 many households

• A) had little savings or other reserve assets for use to deal with unexpected expenditures.
• B) could safely afford to purchase larger homes because housing is always a good investment.
• C) could spend everything they earned because their interest obligations on outstanding credit were low.
• D) would be able to easily adjust their current spending if their monthly payments on adjustable rate mortgages rose.

---

Definitions:

Pay

Remuneration given by an employer to an employee for their labor or services.

Credit Period

The duration during which a buyer can pay for purchased goods or services without incurring interest or penalties.

Discount Period

The time period between the present date and the maturity date of a bill of exchange or a delayed payment, during which a discounted price may be applied.

Invoice Date

The date when an invoice is generated or issued, marking the start of the payment term period.