Homer Has Been Saving to Buy a New Car in Five

question 23

Multiple Choice

Homer has been saving to buy a new car in five years and expects that the car of his dreams will cost $35,000. If the interest rate is 8 percent per year, how much money should Homer have in his bank account today in order to have enough money to buy the car in 5 years?

• A) $1,852.28
• B) $22,055.94
• C) $23,820.41
• D) $25,726.04

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Definitions:

Production Costs

The overall expenses associated with manufacturing goods or providing services, including labor, materials, and overhead.

Elasticity of Resource Demand

The responsiveness of the quantity demanded of a resource to a change in its price.

Unit Wages

The amount of compensation received by workers per unit of time or per unit of output produced.

Employed Workers

This term refers to individuals who are currently working for pay or profit, whether on a full-time or part-time basis.