Kurt Invests $1,000 at a 10% Rate of Return for Twenty

question 23

Multiple Choice

Kurt invests $1,000 at a 10% rate of return for twenty years. The return is based on simple interest that is paid at the end of each year. Which one of the following is correct?

• A) Kurt will receive more interest in year twenty than in year one.
• B) Kurt will receive the same amount of interest each year.
• C) Kurt will not receive any interest for the first year.
• D) Kurt will receive less interest in year twelve than in year eight.
• E) Kurt will receive interest on both the principal and year one's interest in year two.

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Definitions:

Specific Excise Tax

A tax levied on a particular good or service, usually based on a fixed amount per unit, such as per liter of alcohol or per pack of cigarettes.

Unitary

A term in economics used to describe a situation where a change in one factor leads to a proportionate change in another factor.

Price Elasticity

A measure of how much the quantity demanded of a good responds to a change in the price of that good, indicating the sensitivity of consumers to price changes.

Specific Excise Tax

A fixed tax imposed on a specific quantity of a good, regardless of its price, typically applied to items such as alcohol and tobacco.