Suppose That You Were to Incorporate the Repayment of a Consumer

question 11

Multiple Choice

Suppose that you were to incorporate the repayment of a consumer loan interest and principal into an intertemporal budget constraint. The loan would be added as income in the year received and

• A) principal and interest would all be subtracted in the year the loan was finally paid off.
• B) interest and principal would be subtracted in each year according to that schedule by which the loan was to be paid off.
• C) interest would be subtracted immediately on receipt of the loan, but principal would be subtracted only in the year that the loan was finally paid off.
• D) only interest would be subtracted and that only for the duration of the loan.
• E) none of the above.

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