Narrative 11-1 Solve the Following Problems Using Either Tables 11-1 or 11-2

question 118

Multiple Choice

Narrative 11-1
Solve the following problems using either Tables 11-1 or 11-2 from your text. When necessary, create new table factors. (Round new table factors to five decimal places, round dollars to the nearest cent and percents to the nearest hundredth of a percent)
-Gil wants to have $9,500 in 7 years. Use the present value formula to calculate how much he should invest now at 2% interest, compounded semiannually in order to reach his goal.

• A) $8,125.25
• B) $8,875.36
• C) $8,264.62
• D) $8,800.89

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Definitions:

Leakage

Any diversion of income from the domestic spending stream; includes saving, taxes, and imports.

Circular Flow

A model in economics that describes the movement of resources, goods and services, and money among different sectors in an economy.

Leakages-Injections Approach

An economic understanding and analysis of how savings, taxes, and imports (leakages) offset government spending, investments, and exports (injections) in the circular flow of income.

Value Added

The increase in worth of a product or service as a result of a particular process, often characterized by the difference between the price of the finished product and the cost of the inputs involved in making it.