Which of the Following Is Not Correct

question 315

Multiple Choice

Which of the following is not correct?

• A)Many measures of inequality are based on income, which may not reflect a person's standard of living.
• B)Because many of the poorest families receive in-kind transfers, more families have lower standards of living when compared to poverty rates based on income.
• C)Because people can borrow and save to smooth out life cycle changes in income, equality measures based only on income may not reflect a person's standard of living.
• D)A person's standard of living depends more on her permanent income than her transitory income, so inequality measures based on current income may be misleading.

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Definitions:

Preauthorized Payments

Financial arrangements allowing a payee to automatically withdraw money from a payer's bank account for recurring bills or subscriptions.

Collection Time

The duration it takes for a business to receive payments owed by its customers.

Lockbox System

A service provided by banks to companies for the receipt of payment from customers, whereby payments are sent directly to a post office box, rather than to the company, to expedite the deposit process.

Clearing Process

The procedure by which financial trades settle; that is, the correct and timely transfer of funds to the seller and securities to the buyer.