The Real Cash Flow Occurring in Year 2 Is $60,000

question 67

Multiple Choice

The real cash flow occurring in year 2 is $60,000. If the inflation rate is 5 percent per year and the real rate of interest is 2 percent per year, calculate the nominal cash flow for year 2.

• A)$60,000
• B)$62,424
• C)$66,150
• D)$63,654

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Definitions:

Henry George

An American economist known for his advocacy of a single land tax and author of "Progress and Poverty," which argues land should be owned communally to address social inequalities.

Land

An essential factor of production representing all natural resources used to produce goods and services.

Total Supply

The entire amount of a particular good or service available for purchase at any given price and time in a market.

Perfectly Inelastic

A situation in demand where the quantity demanded does not change regardless of changes in price.