Suppose Two People with the Same Level of Income and Wealth

question 10

Multiple Choice

Suppose two people with the same level of income and wealth have different discount rates.Joe has a very high discount rate and Jim has a very low discount rate.Which one of the following is TRUE?

• A) Joe is more likely to borrow than Jim.
• B) Joe is less likely to borrow than Jim.
• C) Joe and Jim will borrow the same amount.
• D) Neither Joe nor Jim would be borrowers.

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Definitions:

Taxpayer Identification Number

A unique identifier assigned to individuals and entities by the IRS or Social Security Administration, used for tax purposes.

U.S. Exempt Payee

A category used for certain entities or individuals that are exempt from tax withholding on certain types of income, as specified by the IRS.

Federal Withholding Tax

Income tax withheld from employees' wages and paid directly to the government by the employer, acting as an advance payment of income tax.

Semimonthly Wages

Wages that are paid twice a month, resulting in 24 pay periods within a year.