When Evaluating Credit, a Customer Who Has Sufficient Disposable Income

question 14

Multiple Choice

When evaluating credit, a customer who has sufficient disposable income and cash flow to pay off a loan is said to have

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

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Definitions:

Shifts to the Right

A phrase indicating an increase in supply or demand in economic graphs, typically showing improvement or growth.

Price Effect

Refers to the impact on consumer demand or the quantity demanded of a good when its price changes, holding other factors constant.

Quantity Effect

The change in total revenue resulting from a change in the quantity of a product sold, holding price constant.

Price Elasticity of Demand

A measure of how much the quantity demanded of a good responds to a change in the price of that good, quantitatively defined as the percentage change in quantity demanded divided by the percentage change in price.