It Is Better to Use Your Savings Instead of Borrowing

question 30

Multiple Choice

It is better to use your savings instead of borrowing to make a purchase when:

• A)the borrower has adequate savings.
• B)interest rates are rising.
• C)interest rates are falling.
• D)the cost of borrowing is greater than the interest earned on savings.
• E)the interest earned on savings is greater than the interest paid on the loan.

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Definitions:

Propinquity

The effect of physical or psychological proximity on the formation of relationships and people's attraction to each other.

Similarity

The state or fact of being alike or having common features, often used to describe how objects, ideas, or individuals share common characteristics.

Reciprocity

A social norm dictating that people should return the help or kindness they receive from others.

Communicator

A person or device that transmits or exchanges information.