It Is Better to Use Your Savings Instead of Borrowing

question 79

Multiple Choice

It is better to use your savings instead of borrowing to make a purchase when:

• A) you have adequate savings.
• B) interest rates are rising.
• C) interest rates are falling.
• D) the cost of borrowing is much greater than the interest earned on savings.
• E) the interest earned on savings is greater than the interest paid on the loan.

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Definitions:

Fairness

A broad concept referring to justice, equality, and impartiality in the distribution of benefits and burdens among individuals.

Mental Accounting

The psychological process of categorizing money into different accounts based on subjective criteria, affecting spending and investment decisions.

Behavioral Economics

A field of economic research that combines psychological insights with economic theory to understand how people make decisions and how they can sometimes deviate from rational decision-making.

Threat Of Rejection

The potential or perceived risk of having an offering, proposal, or application denied or refused.