Question
2. Which scenario is an example of good dobt? 1. Borrowing money for a vacation to relax and enjoy 2. Borrowing money for a degree that increases job prospects and incon 3. Borrowing money to buy the latest fashion trends. 4 Borrowing money to eat at a fancy restaurant.
Solution
4.5
(323 Votes)
Dana
Professional ยท Tutor for 6 years
Answer
###B. Borrowing money for a degree that increases job prospects and income
Explanation
##Step 1: Defining Good Debt###Good debt is an investment that is expected to generate a positive return or increase future earning potential. It builds equity and provides long-term benefits.##Step 2: Analyzing the Options###Option 1 (Vacation): A vacation is a consumption expense, not an investment. It does not increase earning potential.###Option 2 (Degree): A degree can lead to higher-paying jobs, increasing future income. This represents an investment in human capital.###Option 3 (Fashion): Fashion trends are consumption expenses and depreciate quickly. They do not offer a return on investment.###Option 4 (Restaurant): Eating at a fancy restaurant is a consumption expense with no long-term financial benefit.##Step 3: Identifying the Correct Answer###Based on the definition of good debt, borrowing money for a degree that increases job prospects and income is the only option that represents an investment with potential for future returns.#