A bank makes personal loans easier to obtain while keeping interest rates unchanged. What is the most likely effect on household borrowing?, Borrowing is likely to increase., Borrowing is likely to decrease., Borrowing becomes more expensive., Borrowing becomes unavailable., A household borrows $25,000 to purchase a property. What type of borrowing is this?, Overdraft, Pension contribution, Mortgage, Precautionary saving, Why might a low-income household have greater difficulty obtaining a loan?, It is less likely to need borrowed funds., It may have less security to offer lenders., It usually faces lower borrowing costs., It is more likely to have higher future income., The interest rate on personal loans rises from 5% to 8%. Which outcome is most likely, other things being equal?, Borrowing becomes cheaper and increases., Borrowing becomes cheaper and decreases., Borrowing becomes more expensive and increases., Borrowing becomes more expensive and decreases., A person expects their income to rise substantially next year. How could this affect their current borrowing?, They may borrow more because they expect greater future repayment ability., They may borrow less because future income makes current borrowing impossible., They cannot borrow until the higher income is actually received., Their expected income has no relevance to borrowing decisions., Which situation best illustrates borrowing being used to maintain living standards during temporary financial difficulty?, A household invests surplus income in shares for capital gain., A worker with temporarily reduced income uses an overdraft to meet normal expenses., A student saves monthly towards a future house deposit., A family purchases government securities using existing savings., A borrower receives $12,000 and must eventually repay $13,800, including interest. What is the interest cost?, $1,200, $1,500, $1,800, $25,800, Two countries have similar household incomes. In Country X, borrowing is widely viewed as normal; in Country Y, borrowing is considered financially risky. Which is most likely?, Borrowing is necessarily higher in Country Y., Social attitudes can contribute to higher borrowing in Country X., Social attitudes affect saving but never borrowing., Borrowing must be identical because incomes are similar., A household has $4,000 of current disposable income and borrows $1,500. It spends the entire amount available. How much does it spend?, $2,500, $4,000, $5,500, $6,000, Which statement best evaluates borrowing as a way of increasing current spending?, It permanently increases disposable income without creating future obligations., It allows higher current spending but creates repayment and interest obligations., It reduces current spending because borrowed funds cannot be used immediately., It eliminates financial risk because lenders absorb all repayment costs.

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