Normative Economics

question 166

Multiple Choice

Normative economics

• A) is the focus of most modern economic reasoning.
• B) answers the question "What ought to be?"
• C) predicts the consequences of alternative actions.
• D) answers the question "What is?"

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Definitions:

Interest Rate

The amount charged by a lender to a borrower for the use of assets, expressed as a percentage of the principal.

Interest

A charge for borrowed money, generally a percentage of the amount borrowed, paid by the borrower to the lender over a set period.

Borrower's Payment

The amount of money a borrower is required to pay back to a lender, often on a regular schedule, including both principal and interest.

Present Value

The current worth of a future sum of money or stream of cash flows given a specified rate of return, used in discounting to assess investment opportunities.