The Most Common Use of Consumer Loans Is to Finance

question 75

Multiple Choice

The most common use of consumer loans is to finance:

• A) a new car.
• B) college education.
• C) a vacation.
• D) a house.
• E) furniture.

Describe the roles and functions of central bank deposits and money market instruments.

Understand the pricing mechanisms in bond and Treasury markets.

Familiarize with the concept of short selling and futures positions in financial markets.

Grasp the cash flow characteristics and rights of preferred stockholders versus common stockholders.

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Definitions:

Budget Line

A graphical representation showing all possible combinations of two goods that can be purchased given a consumer's income and the prices of the goods.

Price

The sum of money anticipated, needed, or provided as payment for an item.

Shift Outward

An economic term referring to the expansion of a production possibility frontier, indicating an increase in an economy's capacity to produce.

Budget Lines

Graphical representations of all possible combinations of two goods that a consumer can afford given their income and the prices of the goods.