Interest-Free or Below-Market Loans

question 61

Multiple Choice

Interest-free or below-market loans

• A)must always have interest imputed on them.
• B)may result in treating the borrower as paying interest.
• C)result in treating the entire loan proceeds as a gift.
• D)will always result in at least $1,000 of interest income being imputed.

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Definitions:

Wage Rate

The amount of money paid to an employee per unit of time or for each unit of output produced.

Demand Schedule

A table or graph that shows the quantity of a good or service that consumers wish to buy at each price level.

Marginal Product

The additional output that is generated by employing one more unit of a specific factor of production, keeping other inputs constant.

Marginal Revenue Product

The additional revenue generated from using one more unit of a factor of production, holding other factors constant.