When a Loan Agreement Contains Actions for a Borrowing Company

question 32

Multiple Choice

When a loan agreement contains actions for a borrowing company to comply with,such as supplying financial statements,these are called:

• A) accounting ratios.
• B) negative covenants.
• C) positive covenants.
• D) loan options.

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Definitions:

Gross National Income

An economic metric that totals the domestic and foreign output of residents of a country, including product taxes and minus subsidies not included in the valuation of output.

APC

Average Propensity to Consume, which measures the fraction of income spent on consumption out of the total income.

Disposable Income

Financial endowment to households for the purpose of spending and saving after mandatory tax deductions.

Consumption

The use of goods and services by households. It represents the end-use of products and is a primary component of aggregate demand in an economy.