You Invest $1,000 in an Interest Paying Account

question 35

Multiple Choice

You invest $1,000 in an interest paying account.At the end of the first year you have $1,050, and at the end of the second year you have $1,102.50.This is an example of which of the following concepts?

• A)Compound interest
• B)Simple interest
• C)Present value
• D)Changes in purchasing power

---

Definitions:

Optimal Choice

The best possible selection among various alternatives, considering constraints and objectives, to maximize or minimize desired factors such as utility, profit, or costs.

Consumer

An individual or group that purchases goods and services for personal use and not for manufacture or resale.

Marginal Utility

The additional satisfaction or benefit gained from consuming one more unit of a good or service.

Pretzels

A type of baked pastry made from dough that is commonly shaped into a knot and often salted.