The higher the interest rate:
A. the greater the level of inflation.
B. the smaller the present value of a future amount.
C. the greater the present value of a future amount.
D. None of the statements associated with this question are correct.
Answer: B. the smaller the present value of a future amount.
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An asset is said to be riskless if:
A) it can be easily converted into cash. B) its value does not change from day to day. C) its value is more likely to fall in future. D) it offers a positive rate of interest.
The demand for money curve shifts rightward if
A) the price level increases. B) real GDP increases. C) the nominal interest rate increases. D) the real interest rate decreases.
Before its IPO, Facebook was an example of a private firm. As a private firm, Facebook was
A) not subject to government regulations and taxation. B) not legally allowed to raise funds through venture capital firms. C) run by stockholders and a board of directors. D) run by its founder, Mark Zuckerberg.
A country with a fixed exchange rate experiences upward pressure on the exchange rate value of its currency. The central bank chooses to intervene in the market to maintain its fixed exchange rate. How would the central bank go about intervening? If the upward pressure on the currency persists, would it be difficult to maintain the fixed exchange rate? Why or why not? Would your answers differ if the country carried out sterilized intervention? Why or why not? Give an example of a country that attempted to maintain its exchange rate in the face of upward pressure on its currency value. What was the result?
What will be an ideal response?