Figure 21-26 The Figure Below Illustrates the Preferences of a Representative Consumer

question 68

Multiple Choice

Figure 21-26
The figure below illustrates the preferences of a representative consumer, Carlos.

-Refer to Figure 21-26.Interest rates increase by 4 percent.Carlos's optimal choice point moves from A to B.Carlos consumes

• A) less while he is younger and saves more than he did before interest rates increased.
• B) more while he is younger and saves more than he did before interest rates increased.
• C) less while he is younger and saves less than he did before interest rates increased.
• D) more while he is younger and saves less than he did before interest rates increased.

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Definitions:

Factoring Costs

Expenses associated with selling accounts receivable to a third party, commonly referred to as a factor, to improve cash flow.

Accounts Receivable

Accounts receivable refers to the money owed to a company by its customers or clients for goods or services delivered but not yet paid for.

Credit Sales

Sales where payment is not made immediately by the buyer, but under terms and conditions agreed upon by the seller and the buyer.

Factor

An element contributing to a particular result or situation.