Which of the Following Is True About a Surety's Liability

question 42

Multiple Choice

Which of the following is true about a surety's liability to pay in a surety arrangement?

• A) The surety is secondarily liable for payment.
• B) The surety is primarily liable for payment.
• C) The principal debtor must be in default before the surety can be approached.
• D) The surety can only be approached as a last resort to the creditor.

Analyze the impact of taxes on market activities and calculate the deadweight loss resulting from taxation.

Describe the concept of deadweight loss and its causes.

Examine the future projections of taxes and government spending as a percentage of GDP in the U.S.

Evaluate the advantages and disadvantages of different tax systems including lump-sum tax.

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Definitions:

Present Value

The assessed current value of a future monetary amount or series of financial flows, at a given rate of return.

Compound Interest

Refers to the addition of interest to the principal sum of a loan or deposit, where the added interest also earns interest from then on. This effect makes a sum grow at a faster rate compared to simple interest, which is calculated only on the principal amount.

Present Value

The current value of a future cash amount or ongoing cash flows, when calculated with a specific return rate.

Compounded Monthly

A method of calculating interest where the earned interest is added to the principal at the end of each month, allowing the interest in the next month to be calculated on the new total.