If an Individual Is a Debtor

question 116

Multiple Choice

If an individual is a debtor,

• A) the substitution effect of an interest rate increase is zero.
• B) the income effect of an interest rate increase is zero.
• C) the income and substitution effects of an increase in the interest rate work in the same direction.
• D) the income and substitution effects of an increase in the interest rate work in opposite directions.

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Definitions:

Unrealised Profit

Profit that has been generated but not yet realized through a transaction, such as an increase in value of an investment that has not yet been sold for cash.

Opening Inventory

The value of a company's inventory at the beginning of an accounting period, which is carried over from the end of the previous period.

Tax Effect

The impact of tax laws and regulations on an individual's or company's financial decisions and situations, including the calculation of tax liabilities.