Refer to the Above Diagram

question 48

Multiple Choice

Refer to the above diagram.Curve (a) is the current production possibilities frontier for the economy.Other things being equal, society's current choice of point P on curve (a) means:

• A)more rapid economic growth compared to choosing point N.
• B)a slower rate of economic growth compared to choosing point N.
• C)the same rate of growth as would occur if point N were chosen.
• D)it is unachievable because it exceeds the productive capacity of the economy.

Describe the time value of money and its importance in finance.

Calculate and compare future values of investments with different interest compounding frequencies.

Define and calculate the present value (PV) of future cash flows.

Describe the impact of the discount rate on present value calculations.