Discounting is the process whereby
A) present values are adjusted to their future value, using the interest rate.
B) future values are converted to their value today, using the interest rate.
C) product prices are reduced (discounted) to increase sales and profits today.
D) future values are adjusted for inflation.
B
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The gap between potential GDP and real GDP had been as large as 7 percent during the worst of the 2007-2009 recession. By 2015, the gap
A) was positive, with real GDP exceeding potential GDP. B) had been eliminated. C) remained at 7 percent. D) was still nearly 3 percent.
In Eugene, Oregon, next year there is a 2% chance of an earthquake severe enough to destroy all buildings and personal property
Quincy, who has $3,000,000 in buildings and personal property, has the opportunity to purchase complete earthquake insurance. Which is true? A) Quincy should not purchase earthquake insurance unless he can get it for less than $60,000, because that's all he could possibly lose in an earthquake. B) Quincy should not purchase earthquake insurance unless he can get it for less than $60,000, because that's his expected loss in an earthquake. C) If Quincy buys earthquake insurance, and an earthquake does not occur, he will have received no utility from the transaction. D) What Quincy is willing to pay for the earthquake insurance depends upon his degree of risk aversion. E) Quincy should be willing and able to pay up to $3,000,000 for earthquake insurance.
To an economist, rational self-interest means that individuals try to weigh the expected marginal (additional) benefits and marginal (additional) costs of their decisions
a. True b. False Indicate whether the statement is true or false
Which of the following is an example of a consumption expenditure?
A. the construction of a new public library B. the purchase of a ticket to a New Orleans Saints game C. the purchase of a new fire truck D. the salary paid to the mayor of Denver