Cecilia Made a Check Out to Gideon for $15

question 21

Multiple Choice

Cecilia made a check out to Gideon for $15.Gideon fraudulently changed the check to read $150,and cashed it at Corner Bank.Is Cecilia discharged from liability on the check?

• A)Yes,Cecilia owes nothing on the check because alteration of a check is a real defense and real defenses are good even against holders in due course.
• B)No,Cecilia pays $150 because of the impostor rule.
• C)No,Cecilia pays $150 because she is not an indorser or accommodation party.
• D)Yes,Cecilia owes nothing unless Corner Bank is a holder in due course,in which case she owes the original $15.

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Definitions:

Deflation

A decrease in the general price level of goods and services in an economy over a period of time, potentially leading to increased unemployment and slower economic growth.

Inflation

The pace of ascent in the general pricing for goods and services, eroding the capability to buy.

Expansionary Gap

A situation where the actual output in an economy exceeds the potential output, typically leading to inflation.

Coordination

The process of organizing people or groups so that they work together properly and well.