Jane Wants to Set Aside Funds to Take an Around

question 60

Multiple Choice

Jane wants to set aside funds to take an around the world cruise in four years. Jane expects that she will need $12,000 for her dream vacation. If she is able to earn 8% per annum on an investment, how much will she have to set aside today so that she will have sufficient funds available?

• A) $2,663.
• B) $16,325.
• C) $8,820.
• D) $8,167.

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Definitions:

Goods Y

A reference to a particular class or type of goods, often used in economic models.

Diminishing Marginal Rate

The Decline in the additional output produced when a new unit of input is added, with all other inputs held constant.

Substitution

The economic concept where consumers replace more expensive items with less costly alternatives, or firms replace inputs with more economical options.

Convex Preferences

An economic assumption that consumers prefer combinations or mixes of goods over singular extremes, depicting their choices lead to higher satisfaction.