Jordan has the following assets and liabilities: $$\begin{array} { l | r }
\hline \text { Tuo cars } & \$ 10,000 \
\text { House } & \$ 200,000 \
\text { Mortgage } & \$ 100,000 \
\hline \text { Cash } & \$ 1,000 \
\text { Car loars } & \$ 3,000 \
\hline \text { Checkire accourtbalarce } & \$ 2,000 \
\text { Credit card balarce } & \$ 1,000
\end{array}$$
Suppose that Jordan wins $100,000 in the lottery. If he uses that money to pay off his mortgage, his wealth would ________; if he puts that money in his checking account, his wealth would ________;
A)increase to $209,000; not change
B)not change; increase to $207,000
C)increase to $209,000; increase to $209,000
D)increase to $207,000; not change

Question

Jordan has the following assets and liabilities: $$\begin{array} { l | r } 
\hline \text { Tuo cars } & \$ 10,000 \
\text { House } & \$ 200,000 \
\text { Mortgage } & \$ 100,000 \
\hline \text { Cash } & \$ 1,000 \
\text { Car loars } & \$ 3,000 \
\hline \text { Checkire accourtbalarce } & \$ 2,000 \
\text { Credit card balarce } & \$ 1,000
\end{array}$$  
Suppose that Jordan wins $100,000 in the lottery. If he uses that money to pay off his mortgage, his wealth would ________; if he puts that money in his checking account, his wealth would ________;
A)increase to $209,000; not change
B)not change; increase to $207,000
C)increase to $209,000; increase to $209,000
D)increase to $207,000; not change

Quizplus · Accepted Answer

Wealth is calculated as assets minus liabilities. Initially, Jordan's assets total $213,000 (cars + house + cash + checking account balance) and liabilities total $104,000 (mortgage + car loans + credit card balance), making his initial wealth $109,000. Paying off the mortgage or adding to the checking account both effectively increase his assets by $100,000 (either by reducing liabilities or increasing assets directly), making his new wealth $209,000 in either scenario.

Jordan Has the Following Assets and Liabilities Suppose That Jordan Wins $100,000 in the Lottery