Suppose That You Have $100 Today and Expect to Receive

question 36

Multiple Choice

Suppose that you have $100 today and expect to receive $100 one year from today. Your money market account pays an annual interest rate of 25%, and you may borrow money at that interest rate. Consider the budget constraint between "spending today" on the horizontal axis and "spending a year from today" on the vertical axis. What is the slope of this budget constraint?

• A)−0.75
• B)−1.00
• C)−1.25
• D)−2.25

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Definitions:

Ventricles

Chambers of the heart that receive blood from the atria and pump it out to the lungs and the rest of the body.

Declarative Memories

A type of long-term memory that involves the conscious recall of facts and events.

Hippocampus

Brain region essential to formation of declarative memories.

Motor Output

The response action of the nervous system activating muscles or glands after processing information.