When economists say that an interest rate is compounding, they imply that:
A) the rate of interest decreases every year.
B) the rate of interest increases every year.
C) interest is being earned on interest.
D) double the interest payment is received every two years.
C
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Harry's Hookahs incurs $700,000 per year in explicit costs and $500,000 in implicit costs. The company earns $1.4 million in revenues and has $3.7 million in net worth. Based on this information, what is the accounting profit for Harry's Hookas?
A) $200,000 B) $700,000 C) $900,000 D) $1.1 million
If a monopolistically competitive firm raises its price, it
a. loses all of its customers (sales drop to zero) b. loses some, but not all, of its customers c. loses very few customers d. loses no customers at all e. gains customers (sales increase)
If the economy is inflationary, the Fed would most likely:
a. increase bank reserves by raising the discount rate. b. increase bank reserves by buying government securities c. decrease bank reserves by lowering the discount rate. d. decrease bank reserves by selling government securities. e. decrease bank reserves by lowering the legal reserve requirement.
The discount rate is the interest rate:
A. the Fed charges on loans to individuals. B. commercial banks charge their largest customers. C. the Fed charges on loans to commercial banks. D. the interest rate commercial banks charge one another for overnight loans.