Because of the Compounding Effect

question 230

Multiple Choice

Because of the compounding effect

• A) people with high credit scores often have difficulty obtaining loans.
• B) people with low credit scores often have difficulty obtaining loans.
• C) a small loan balance becomes large.
• D) a large loan balance becomes smaller.

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Definitions:

Tax on Consumption

A levy placed on the spending on goods and services, often implemented through sales tax or value-added tax (VAT).

Standard of Living

The level of wealth, comfort, material goods, and necessities available to a certain socioeconomic class or geographic area.

Saving

The process of setting aside a portion of current income for future use, either by depositing money in a bank or purchasing financial instruments.

Benefits-Received Principle

A theory of fairness holding that taxpayers should contribute to government (in the form of taxes) in proportion to the benefits they receive from public expenditures.