Which of the Following Best Expresses the Policy Behind the Truth-In-Lending

question 50

Multiple Choice

Which of the following best expresses the policy behind the Truth-in-Lending Act?

• A) To help borrowers by requiring lenders to charge a "reasonable" rate of interest as determined by the Federal Reserve Board.
• B) To help small business by prohibiting lenders from using,as collateral for secured loans,a business's most important assets.
• C) To help debtors for loans for personal,family,household or agricultural purposes to be armed with the necessary information on a loan to better bargain for credit and to choose the creditor with the best terms.
• D) To help lenders by permitting them to investigate a person's credit history without having to worry about state libel laws.

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Definitions:

Full Employment

A situation in an economy where all available labor resources are being used in the most efficient way, typically with only natural unemployment remaining.

Marginal Propensity

Measures the portion of additional income that an individual or entity spends on consuming goods rather than saving.

Multiplier

The ratio of the change in an endogenous variable to the change in an exogenous variable it is dependent on, often used in the context of fiscal policy’s effect on the economy.

MPC

Stands for Marginal Propensity to Consume, indicating the proportion of additional income that is spent on consumption.