Question

Mr. Layte needs a mortgage to buy his first house. Which describes how this will affect Mr. Layte's financial situation?

Select Multiple Answers
A
He will have to watch his spending carefully as he will have extra costs that come with owing a house.

B
The amount of money he has to spend on things will increase because he is in debt. The bank will give him a monthly payment so he can pay for the house.

C
The amount of money he has to spend on things will remain unchanged.

D
The amount of money he has to spend on things will decrease because he is in debt. He must make monthly payments to the bank to pay for the credit he received.

Answer 1

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Answer:

A, D

Explanation:

Assuming that Mr. Layte must pay for his mortgage from his (otherwise) disposable income, that disposable income will decrease. As in choice A, there will likely be additional ownership expenses besides the mortgage. Under our assumption, Mr. Layte's disposable income does not remain the same or increase.

The appropriate choices are A and D: the amount of money he has to spend on things will decrease ...