Erin borrowed $18,000 to buy a car. Her loan will be paid off in 5 years. By the time that she pays off the loan, she will have made $20,327 in payments. Why did she have to pay $2,327 more than the price of the car?
(A) She had to pay interest of $2,327 for the privilege of borrowing the creditor of $18,000.
(B) She had to pay interest of $2,327 for the privilege of borrowing the principal of $18,000.
(C) She had to pay the principal of $2,327 for the privilege of borrowing the mortgage of $18,000.
(D) She had to pay a default of $2,327 for the privilege of borrowing the principal of $18,000.
Ans: (B) She had to pay interest of $2,327 for the privilege of borrowing the principal of $18,000.
You might also like to view...
GDP is different than GNP in that
A) it accounts for net unilateral transfers. B) it does not account for indirect business taxes. C) it does not account for a country's production using services with foreign-owned capital. D) it accounts for depreciation. E) it is unhelpful when tracking national income.
Following a decrease in government spending, as the price level falls we would expect the level of interest rates to ________ and investment to ________
A) decrease; decrease B) decrease; increase C) increase; decrease D) increase; increase