Which of the Following Is the Worst Approach to Solving

question 15

Multiple Choice

Which of the following is the worst approach to solving the problem of an annual budget deficit?

• A)Liquidate enough savings or investments to make up the deficit.
• B)Get an additional credit card and cover the deficit with that.
• C)Renegotiate debt to longer term,lower interest options.
• D)Increase income by getting an additional part-time job.

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Definitions:

Tax-deferred

An investment in which taxes on the principal and/or earnings are delayed until the funds are withdrawn, commonly seen in retirement accounts like 401(k)s and IRAs.

Accumulation Period

The time frame in which an investment, such as a annuity, accumulates interest or income before disbursement or annuitization.

Distribution Period

The time frame over which payments are made from an investment, retirement plan, or insurance policy to the beneficiary.

Traditional IRA

A type of retirement account allowing individuals to direct pre-tax income toward investments, with taxes deferred until withdrawal.