Some Lending Institutions Calculate the Monthly Payment M on a Loan

question 39

Multiple Choice

Some lending institutions calculate the monthly payment M on a loan of L dollars at an interest rate r (expressed as a decimal) by using the formula: where k = [1 + ( r / 12 ) ] ^12t and t is the number of years that the loan is in effect. An automobile dealer offers customers no-down-payment 8-year loans at an interest rate of 10%. If a customer can afford to pay $122 per month, find the price of the most expensive car that can be purchased.

• A)$ 8,050.00
• B)$ 8,045.62
• C)$ 8,039.98
• D)$ 8,048.79
• E)$ 8,029.63

Understand the Laffer curve and its implications for setting tax rates.

Evaluate the impact of specific taxes on behavior and market outcomes.

Understand how the elasticity of supply and demand influences the burden of an excise tax.

Comprehend the concept of deadweight loss (excess burden) as the loss from eliminated mutually beneficial exchanges due to taxes.

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Definitions:

Peripheral Nervous System

The part of the nervous system that consists of the nerves and ganglia outside of the brain and spinal cord, connecting the central nervous system to limbs and organs.

Autonomic

Refers to functions of the body that occur automatically, without conscious thought, such as heart rate and digestion.

Somatic

Pertaining to the body, especially as distinct from the mind.

Interneurons

Neurons that are found exclusively within the central nervous system and act as intermediaries between sensory or motor neurons and the central nervous system.