The present discounted value of a future payment will decrease when interest rates decrease.
Answer the following statement true (T) or false (F)
False
The present discounted value of a future payment declines with either higher interest rates or longer delays in future payment.
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According to the quantity theory of money, a 25 percent change in M, the quantity of money, leads to a 25 percent change in
A) V, the velocity of circulation. B) P, the price level. C) Y, real GDP. D) R, the interest rate.
The smaller the price elasticity of demand, the
a. more likely the product is a luxury. b. smaller the responsiveness of quantity demanded to a change in price. c. more substitutes the product has. d. greater the responsiveness of quantity demanded to a change in price.
In a perfectly competitive market, the market demand curve is ________ , while an individual firm's demand curve is ________
a. downward-sloping; horizontal. b. downward-sloping but relatively flat; downward-sloping but relatively steep. c. horizontal; downward-sloping. d. horizontal; vertical
How does a higher level of saving lead to higher GDP in the future?
(A) Because increased savings will divert money that would be spent on imported goods in the current year. (B) Because more capital is available for investment, leading to higher output through capital deepening. (C) Because a higher national savings rate encourages immigration and expands the labor force. (D) Because the government taxes savings accounts to pay for education.