Which of the Following Formulas Would You Use to Correctly

question 24

Multiple Choice

Which of the following formulas would you use to correctly calculate the future amount of an investment of $600 that was earning interest at 8% annually for three years?

• A) $600 * 1.08 * 1.08 * 1.08
• B) $600 * 1.08 * 3
• C) 3 * $600 * 0.08
• D) (1.08 * 3) * $600

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Definitions:

MPC

Marginal Propensity to Consume, which is the proportion of an increase in income that gets spent on consumption.

MPS

The marginal propensity to save, which is the fraction of an increase in income that is saved rather than spent.

Milton Friedman

An American economist known for his strong belief in free-market capitalism.

Permanent

Something that is meant to last or continue indefinitely without change.