When you start saving even a small amount early in life and continue saving for a long time (e.g., until you retire), you can build up a large “nest egg” because of:
a. compound interest.
b. simple interest.
c. taking big risks.
d. sacrificing all the good things earlier.
a. compound interest.
Compound interest is an interest rate calculation on the principal plus the accumulated interest. So you earn interest on the interest, not just on the original investment.
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The price of apples is currently $1 per pound. If apples are sold in a competitive market and the price of apples increases to $2 per pound, the marginal revenue product (MRP) of labor used to produce apples would
A. double. B. change in a manner that cannot be determined without additional information. C. be cut in half. D. not change.
Selling a newspaper at retail for ten cents when it cost twenty cents wholesale may be profitable if
A) people who come in to buy a newspaper often make other purchases also. B) the wholesaler is also losing money. C) there are no substitutes for newspapers available. D) there is about to be a newspaper strike.
Which of the following are NOT liabilities on the Fed's balance sheet?
A) discount loans B) bank deposits C) deferred availability cash items D) U.S. Treasury deposits
If the dollar used to buy 120 yen and now buys 100 yen, there has been
A. depreciation of the yen. B. appreciation of the dollar. C. a decrease in the demand for yen. D. depreciation of the dollar.