The Budget Method for Determining the Amount of Life Insurance

question 15

Multiple Choice

The budget method for determining the amount of life insurance needed is based on

• A)your investments and cash flow.
• B)your annual income and expenses.
• C)you current situation and your company pension.
• D)your current situation and expected future needs.

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Definitions:

Hyperinflation

An extremely high and typically accelerating inflation rate, causing a rapid erosion of currency's value.

Deflation

A decrease in the general price level of goods and services, often characterized by the increase in the value of money.

Disinflation

Disinflation is the process of slowing down the rate of inflation, indicating a reduction in the speed at which the general level of prices for goods and services is rising.

Wage-Price Spiral

A macroeconomic concept describing a situation where rising wages lead to increased prices, which in turn lead to demands for higher wages, thus perpetuating inflation.