What is a regular car payment an example of?
A.
fixed expense
B.
variable expense
C.
interest
D.
ownership investment
A. Fixed expense.
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A regular car payment is an example of a fixed expense.
To determine the answer, we need to understand the different types of expenses. Expenses can generally be classified as either fixed or variable.
Fixed expenses are recurring costs that remain relatively constant over time, regardless of changes in other factors. Examples of fixed expenses include rent, mortgage payments, insurance premiums, and loan payments. These are typically set amounts that need to be paid consistently, like a car payment which is a fixed amount you owe each month for the duration of the loan.
On the other hand, variable expenses are costs that fluctuate based on various factors, such as usage or changes in market prices. Examples of variable expenses include utility bills, groceries, and transportation costs. Unlike fixed expenses, the amounts for variable expenses may change from month to month.
In the case of a regular car payment, it is a fixed expense because the amount you owe remains the same each month until the loan is fully paid off. Therefore, the correct answer is option A, a regular car payment is an example of a fixed expense.