The Interest Rate Charged on a Car Loan Is Usually

question 184

Multiple Choice

The interest rate charged on a car loan is usually higher than the interest rate charged on a home loan because _____

• A)the market price of a car is less than the market price of a home.
• B)a car is a worse collateral than a home.
• C)the rate of default on car loans is lower than the rate of default on home loans.
• D)people with poor credit ratings take car loans.
• E)people with poor credit ratings are willing to pay higher rates of interest.

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Definitions:

Imperfect Competitor

An imperfect competitor is a market participant that does not meet the conditions of perfect competition, often having some control over the price of its products due to a lack of numerous competitors or product differentiation.

Perfect Competitor

A theoretical firm in a perfectly competitive market that cannot influence the market price and accepts the price as given.

Output

Denotes the total quantity of goods or services produced by a company, industry, or economy within a specific period.

Resource

An asset or material that can be used to produce goods or services and provide economic benefit.