If the Market Interest Rate Is 5% and a Bank

question 13

Multiple Choice

If the market interest rate is 5% and a bank advertises loans at 12%,the bank will receive

• A) no applications.
• B) applications from mostly low-risk borrowers.
• C) applications from mostly high-risk borrowers.
• D) a moral hazard.

Determine the effect of income changes on the demand for goods (normal and inferior goods).

Understand the concept and calculation of cross elasticity of demand.

Apply the midpoint formula to calculate elasticity.

Interpret the significance of elasticity values in economic decision-making.

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Definitions:

Plant Assets

Long-term tangible assets that are used in the operations of a business and are not intended for resale, such as machinery, buildings, and land.

Differential Revenue

The difference in revenue generated from two different business decisions or periods, used to analyze the financial impact of those decisions.

Alternative Proposed Use

A potential use of resources or assets under consideration as an option different from their current application.

Cash

Money in the form of bills or coins, used as a medium of exchange; in accounting, it often refers to assets that are readily available for use.