Which of the Following Equations Shows How to Determine the Future

question 67

Multiple Choice

Which of the following equations shows how to determine the future value (P₁) at the end of one year of a payment or deposit (P₀) made today?

• A) P₀ = P₁/1+r
• B) P₀ (1+r) = P₁
• C) P₀ = P_n/(1+r)ⁿ
• D) none of the above are correct

---

Definitions:

Long-run Aggregate Supply

The total supply of goods and services that an economy can produce when resources are fully employed at their most efficient levels, without inflation.

Short-run Aggregate Supply

The total supply of goods and services that firms in an economy are willing to produce at a given overall price level in a specific time period.

Aggregate Quantity Demanded

The aggregate quantity of a product or service that buyers are prepared and capable of buying at a specific price point within a certain time frame.

Stagflation

An economic condition characterized by stagnant economic growth, high unemployment, and high inflation.