What will be the amount owed at the end of one year if a borrower charges $100 on his/her credit card and doesn't make any payments during the year (assume the interest rate is 1.5% per month)?
What will be an ideal response?
$119.56. While it is tempting to multiply 1.5 times 12, obtaining 18% and the multiplying this by $100 to determine the interest charge, it would be incorrect since we would be ignoring compounding. The correct answer can be determined by using the following: FV = PV(1 + im)12. This will be FV = $100(1.015)12 or $119.56.
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Property rights that are granted to the creators of original work to produce and sell that work are called
A) trademarks. B) copyrights. C) patents. D) exclusive franchises.
Under what circumstances might it be "rational" to rely on adaptive expectations?
What will be an ideal response?
Central banks sometimes attempt quantitative easing when
A) money growth is too high. B) inflation is too high. C) there is a liquidity trap. D) inflation is too low.
When taxes alter individual behavior as people attempt to avoid the tax, efficiency
a. losses are probable. b. gains are possible. c. gains are impossible. d. losses are impossible.