22-41 a Credit Forward Agreement Specifies a Credit Spread on a Benchmark

question 77

True/False

22-41 A credit forward agreement specifies a credit spread on a benchmark U.S.Treasury bond.

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Definitions:

Autonomous Consumption

The minimum level of spending that must occur, even if a household has no income.

Disposable Income

The sum households have for expenditures and savings after taxes on income are deducted.

Dissaving

The process where spending exceeds income, leading to a depletion of savings or accumulation of debt.

APC

The Average Propensity to Consume, which measures the fraction of income that households spend on goods and services rather than saving.