Question

Regarding the amount of money borrowed on a loan, all of the following are true except

A) the amount is based on how much the lender believes you can pay back in the future.
B) you should borrow slightly more than you need to cover future inflation.
C) you should only borrow the amount you need.
D) you will have to pay interest on the entire amount.

Answer 1

The correct answer is B) you should borrow slightly more than you need to cover future inflation. When borrowing money, it is generally recommended to borrow only the amount you need and not more. Borrowing more than you need can lead to unnecessary interest expenses and debt.

Step-by-step explanation:

The correct answer is B) you should borrow slightly more than you need to cover future inflation.

When borrowing money, it is generally recommended to borrow only the amount you need and not more. Borrowing more than you need can lead to unnecessary interest expenses and debt. It is important to carefully consider your financial needs and borrow responsibly.

Inflation refers to the increase in the prices of goods and services over time. Borrowing slightly more than you need to cover future inflation may result in borrowing more than necessary, leading to additional interest costs. It is more cost-effective to borrow only the amount required.

Therefore, all of the statements are true except for B), which suggests borrowing slightly more than needed to cover future inflation.