When Evaluating Credit, a Customer Who Has Paid All Bills

question 32

Multiple Choice

When evaluating credit, a customer who has paid all bills on time and has favorable credit references from other creditors is said to have

• A) creditworthiness.
• B) collateral.
• C) capacity.
• D) character.

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Definitions:

Disposable Income

Funds designated to households for the dual purposes of saving and spending post income tax considerations.

MPC

The marginal propensity to consume, representing the proportion of additional income that an individual will spend on consumption.

Saving

The portion of income not spent on consumption, often put aside for future use or investment.

Disposable Income

The amount of money an individual or household has available to spend or save after income taxes have been deducted.