Juan Has $1,000 That He Would Like to Invest in a CD

question 87

Multiple Choice

Juan has $1,000 that he would like to invest in a CD. His bank offers two alternatives, a one-year CD paying 6% or a two-year CD paying 9% per annum. Juan has been reading that interest rates are rising, and, based on his research, he estimates that by year-end the rate on one-year CDs will increase to 10%. What alternative would give Juan the most interest and what would the total interest be?

• A) Two one-year CDs returning $120 interest
• B) Two one-year CDs returning $160 interest
• C) One two-year CD returning $180 interest
• D) One two-year CD returning $1,900 interest

Recognize the effects of fiscal and monetary policy on inflation, unemployment, and aggregate demand in the short run.

Interpret economic conditions and policy outcomes using the Phillips curve model.

Distinguish between short-run and long-run impacts of economic policies on unemployment and inflation.

Analyze the implications of changes in aggregate demand and aggregate supply on the economy.

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Definitions:

Highly

Describes something of great importance, to a great degree, or with intense quality.

Rules

Guidelines or principles that govern conduct within a particular context or system.

Spans Of Control

The number of subordinates or tasks directly managed by an individual.

Factor

A component or element that contributes to a result or outcome.