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:

Credibility

The quality of being trusted and believed in, often associated with accuracy and reliability.

Skepticism

An attitude of questioning or doubting the validity or authenticity of something supposed to be factual.

Illogical

Lacking sense or clear, sound reasoning; not following the principles of logic.

Inaccurate

Refers to something that is not correct or precise.