The Salesperson Offers,"Buy This New Car for $25,000 Cash Or,with

question 75

Multiple Choice

The salesperson offers,"Buy this new car for $25,000 cash or,with an appropriate down payment,pay $500 per month for 48 months at 8% interest." Assuming that the salesperson does not offer a free lunch,calculate the "appropriate" down payment.

• A) $1,000.00
• B) $4,519.04
• C) $5,127.24
• D) $8,000.00

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Definitions:

Tax Cut

A tax cut involves a reduction in the amount of taxes imposed by a government, which can affect consumer spending, investment, and economic growth.

MPC

The marginal propensity to consume (MPC) indicates the proportion of an increase in income that a consumer will spend on consumption rather than saving.

Crowding-out Effect

A situation where increased government spending leads to a reduction in private sector investment due to higher interest rates.

Aggregate Demand

The total amount of goods and services demanded in the economy at a given overall price level and in a given time period.