Suppose You Borrow $1,000 to Purchase a Car

question 11

Multiple Choice

Suppose you borrow $1,000 to purchase a car.Which of the following correctly represents the changes in your personal balance sheet after the bank lends the money,but before you spend it?

• A)Assets: loan,+$1,000;Liabilities and net worth: checking deposit,+$1,000
• B)Assets: loan,-$1,000,checking deposit,+$1,000;Liabilities and net worth: no change
• C)Assets: loan,+$1,000,checking deposit,-$1,000;Liabilities and net worth: no change
• D)Assets: checking deposit,+$1,000;Liabilities and net worth: loan,+$1,000
• E)Assets: checking deposit,+$1,000;Liabilities and net worth: loan,-$1,000

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Definitions:

Birds

Warm-blooded vertebrates characterized by feathers, beaks, and typically the ability to fly, with some exceptions like ostriches.

Gizzard

Of birds and some other animals, a digestive chamber lined with a hard material that grinds up food.

Acidic Chyme

The partially digested, acidic food mixture that moves from the stomach to the small intestine.

Heartburn

A discomforting burning sensation in the chest, usually occurring after eating, caused by stomach acid refluxing back into the esophagus.