Assume the current interest rate is 20%. The present value of $500 in one year would be
A. $180.
B. $417.
C. $750.
D. $1,083.
Answer: B
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In IS-LM analysis, the nominal interest rate is
A) purely a monetary phenomenon. B) purely a real phenomenon. C) both a monetary and a real phenomenon. D) neither a real nor a monetary phenomenon, but determined by government policy.
A market with more than one seller and significant barriers to entry is called
a. perfect competition b. monopolistic competition c. an oligopoly d. collusive e. regulated
An inflow of capital and a trade deficit are more dangerous when
a. the inflow of capital is channeled into private investment. b. the inflow of capital is used to finance current consumption and/or channeled into unproductive projects. c. the unemployment rate of the country is low, because this will mean the capital inflow will be inflationary. d. the investment rate is already high and the unemployment rate low.
According to the text, a convincing argument against concentration of market power is that
A. The exercise of market power results in a higher price. B. Market power increases incentives for innovation and invention. C. Market power results in lower barriers to entry. D. Large firms can produce more efficiently than small firms because of diminishing returns in production.