Differentiate between principal and time value of money. John invests $100 in a bank for a year. At the end of the year he receives $125. What is the principal and time value of money in this case?
What will be an ideal response?
The amount of the original investment is referred to as principal, while time value of money is the interest or payment received for temporarily giving up the use of money that has been invested.
In this case $100 is the principal, while ($125 - $100 ) or $25 is the time value of money.
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A "tight" money, easy "fiscal" policy combination will be preferred by society which values
A) low growth rates, but more goods and services in the future. B) public goods today greater than private goods in the future. C) private goods today more than public goods in the future. D) public and private goods in the future more than public and private goods today.
The Gallatin Plan (1808) to provide internal land and water transport in the eastern part of the country was a plan that
(a) called for the federal government to finance and build the transport system. (b) called for the eastern states to join together to finance and build the system. (c) called for private financing and building with some federal government assistance in coordinating and planning the transport system. (d) relied primarily on city and county governments to provide the bulk of the financing and building of the transport system.
An oligopolist cannot use the MR = MC rule to find its equilibrium output level because
a. oligopolists do not face stable demand curves for their output b. oligopolists do not try to maximize profits in the long run c. it is too difficult to estimate marginal cost d. the rule applies only in perfect competition e. the minimum efficient scale exceeds total quantity demanded
Financial intermediaries that are collected pools of funds from many investors are called: a. mutual funds. b. banks
c. credit unions. d. stockbrokers.