If the Annual Market Rate of Interest Is 5%,an Asset

question 39

Multiple Choice

If the annual market rate of interest is 5%,an asset that promises to pay $100 after each of the next two years has a present value of

• A)$90.70.
• B)$95.24.
• C)$181.40.
• D)$185.94.
• E)$200.00.

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Definitions:

Net Exports

The net amount obtained when a nation's overall imports are subtracted from its overall exports.

GDP Deflator

A measure of the level of prices of all new, domestically produced, final goods and services in an economy, used to adjust nominal GDP to calculate real GDP.

Inflation

The acceleration in the general cost levels of goods and services, causing a decline in the ability to acquire.

Real GDP

Real Gross Domestic Product (GDP) measures the value of all final goods and services produced within a country in a given period, adjusted for inflation.