Which of the following equations shows how much X dollars will be worth if invested at an annual interest rate i for t years, if interest is compounded annually?
A. (1 + i) t X
B. X/(1 + i) t
C. (1 + X)i t
D. (X + i)
A. (1 + i) t X
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People learn to hold a specific quantity of money for the groceries, theater tickets, gasoline, clothes, film, and other items they habitually purchase. This behavior is representative of the:
A. precautionary demand. B. speculative demand. C. transactions demand. D. volatility demand.
Money provides a way to transfer wealth into the future. This function of money is known as
A) medium of exchange. B) unit of accounting. C) store of value. D) standard of deferred payment.
When a person drives an automobile, that individual is creating
A. private costs only because the individual pays for the insurance, gas etc. B. internal costs only. C. external costs only. D. social costs.
If the Fed buys U.S. Treasury bills and bonds to finance deficits, this means that the government is financing the deficit by
A. selling capital. B. lowering inflation. C. raising interest rates. D. printing money.