Question

which of the following best describes credit?

a fixed amount of money that a borrower pays to a lender

a percentage of a sum borrowed that the borrower pays to the lender

the value of the next - best alternative not chosen when making an economic decision

money that a lender allows a borrower to use with the understanding the money will be repaid

Explanation:

• The first option describes a fixed payment, not credit.
• The second option is interest, not credit.
• The third option is opportunity cost, not credit.
• The fourth option correctly defines credit as funds a lender provides to a borrower with the expectation of repayment.

Answer:

D. money that a lender allows a borrower to use with the understanding the money will be repaid (assuming the options are labeled A - D in order, with the last option being D)