The Amount Earned on a Deposit Becomes Part of the Principal

question 5

Multiple Choice

The amount earned on a deposit becomes part of the principal at the end of a period and can earn a return in future periods is called

• A) discount interest.
• B) compound interest.
• C) primary interest.
• D) future value.

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Definitions:

Discretionary Income

Discretionary income is the amount of an individual's income left for spending, investing, or saving after taxes and personal necessities (like food and shelter) have been paid.

Positively Correlated

A relationship between two variables where an increase in one variable is associated with an increase in the other.

Scientific Method

A systematic, organized series of steps that helps ensure objectivity and consistency in exploring a social or scientific question.

Inductive Reasoning

A logical process in which multiple premises, all believed true or found true most of the time, are combined to obtain a specific conclusion.