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guapka [62]
3 years ago
10

What is a disadvantage of using credit?

Business
2 answers:
Rom4ik [11]3 years ago
5 0
Not being able to pay it off is a big one.
 
nataly862011 [7]3 years ago
4 0

Answer:

Incurring inflated interest charges over and above the principal amount

Explanation:

When items are purchased on credit, it essentially means that the buyer has taken a loan to finance their purchase. This loan incurs interest. Interest is the cost of using spending cash money to buy a good or a service in the current time period  instead of saving and purchasing it at a later period. Credit providers tend to charge extremely high interest for the convenience of flexible purchasing power. These interest charges, accumulated over time, become a source of insolvency for the debtors who are unable to repay the interest, the principal amount or both.

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Identify each statement as either true or false. In the United States, banks keep the entire value of all customer deposits in t
hichkok12 [17]

Answer:

In the United States, banks keep the entire value of all customer deposits in the bank vault to meet customer withdrawals. FALSE.

Banks keep only a portion of the customer deposits in the bank vault. A small portion is kept with the Fed called the Reserve Requirement.

Banks typically loan out a portion of customer deposits. TRUE.

Banks only loan out the portion of customer deposits that they did not leave with the Fed.

Bank runs occur when many customers attempt to withdraw deposits from a bank at the same time and the bank is unable to pay all customer withdrawals. TRUE.

When too many people try to withdraw from a bank, the bank might not meet these obligations because they loaned out money to people and those people were not yet due to pay back. This is a bank run.

The Federal Deposit Insurance Corporation (FDIC) protects bank depositors from bank failure. TRUE.

The fractional reserve banking system requires all banks to keep the total value of customer deposits in their vaults to prevent bank runs. FALSE.

As explained in the first paragraph, the Fed requires that banks keep a portion of customer deposits with the Fed instead of the total value of customer deposits.

6 0
3 years ago
The deterioration of many municipal pipeline networks across the country is a gowing conoer technology proposed for pipeline reh
Misha Larkins [42]

Answer:

a. Compare the mean tensile strengths at the 95% confidence level.

Explanation:

5 0
3 years ago
When the expected rate of inflation is higher than the actual rate of inflation, wealth is: A. not redistributed at all. B. redi
Gemiola [76]

Answer:

D. redistributed from borrowers to lenders.

Explanation:

  • The inflation is the increase of the price levels of the goods and the services in the economy for a long time and shows a reduction in the purchasing power, a common measure is the price index.
  • Very high rates of inflation are caused by the massive growth of the money supply the expected rate of inflation of wealth is measured by the distribution of the wealth of the borrowers to the lenders that create hoardings of prices and fluctuations in the real demands.
3 0
3 years ago
A financial institution can achieve cost savings in its credit card operations if it increases the number of cardholders. This i
vitfil [10]

Answer:

Economies of scope

Explanation:

Economies of scope is a benefit that a company has by producing a a wide range of products or services which reduces the unit cost. In this case of a financial institution, offering more credit cards to a large number of people will help them achieve their desired cost savings. Economies of scope is achieved when it provides a business with ways to generate operational efficiencies.

8 0
3 years ago
Match the correct strategy to the risk..
Brilliant_brown [7]

The following would be the correct answers in order to match the correct strategy to the risk:

1 - Disability Insurance - A Disability

2. Read all contract before you sign - C Scams

3. Warranty - E Product Failure

4. Homeowner’s Insurance - B An expensive repair to the roof of your house

5. Do not give out personal information - D Identity Theft

3 0
3 years ago
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