The Best Measure of the True Cost of Credit Is

question 104

Multiple Choice

The best measure of the true cost of credit is the

• A)monthly payment.
• B)finance charge.
• C)annual percentage rate of interest.
• D)late fee.

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Definitions:

Inferior Good

A type of good for which demand decreases as the income of the consumer increases, opposite to normal goods.

Income Elasticity

A measure of how much the quantity demanded of a good responds to a change in consumers' income, holding all other factors constant.

Expenditures Decline

A situation where there is a reduction in spending by individuals, businesses, or governments.

Elastic Demand

A condition where the demand for a product is significantly responsive to changes in its price.