The following table shows the assets and liabilities of the Chang family in 2007 and 2008.

\begin{tabular}{|l|l|}
\hline 2007 & 2008 \\
\hline home valued at [tex]$\$[/tex] 315,000[tex]$ & home valued at $[/tex]\[tex]$ 325,000$[/tex] \\
\hline mortgage of [tex]$\$[/tex] 265,000[tex]$ & mortgage of $[/tex]\[tex]$ 240,000$[/tex] \\
\hline car valued at [tex]$\$[/tex] 10,000[tex]$ & car valued at $[/tex]\[tex]$ 6,000$[/tex] \\
\hline car loan of [tex]$\$[/tex] 5,000[tex]$ & car loan of $[/tex]\[tex]$ 1,000$[/tex] \\
\hline savings of [tex]$\$[/tex] 2,000[tex]$ & credit card debt of $[/tex]\[tex]$ 1,500$[/tex] \\
\hline
\end{tabular}

Based on the table, which of the following is true?

A. From 2007 to 2008, both assets and liabilities decreased.
B. From 2007 to 2008, both assets and liabilities increased.
C. From 2007 to 2008, assets decreased and liabilities increased.
D. From 2007 to 2008, assets increased and liabilities decreased.

Please select the best answer from the choices provided.



Answer :

To determine which statement is true regarding the changes in the Chang family's assets and liabilities from 2007 to 2008, we need to calculate and compare the totals for each year.

Assets and Liabilities in 2007:

1. Home value: \[tex]$315,000 2. Car value: \$[/tex]10,000
3. Savings: \[tex]$2,000 Total assets for 2007: \[ 315,000 + 10,000 + 2,000 = \$[/tex]327,000
\]

1. Mortgage: \[tex]$265,000 2. Car loan: \$[/tex]5,000

Total liabilities for 2007:
[tex]\[ 265,000 + 5,000 = \$270,000 \][/tex]

Assets and Liabilities in 2008:

1. Home value: \[tex]$325,000 2. Car value: \$[/tex]6,000
3. Savings (considered as a liability when it's a credit card debt): -\[tex]$1,500 Total assets for 2008: \[ 325,000 + 6,000 - 1,500 = \$[/tex]329,500
\]

1. Mortgage: \[tex]$240,000 2. Car loan: \$[/tex]1,000

Total liabilities for 2008:
[tex]\[ 240,000 + 1,000 = \$241,000 \][/tex]

Changes from 2007 to 2008:

- Change in assets:
[tex]\[ 329,500 - 327,000 = \$2,500 \text{ (increase)} \][/tex]

- Change in liabilities:
[tex]\[ 241,000 - 270,000 = -\$29,000 \text{ (decrease)} \][/tex]

From the calculations, we observe that the assets increased by \[tex]$2,500, and the liabilities decreased by \$[/tex]29,000 from 2007 to 2008.

Thus, the correct statement is:

d. From 2007 to 2008, assets increased and liabilities decreased.