Under Which of the Following Conditions Will a Future Value

question 5

Multiple Choice

Under which of the following conditions will a future value calculated with simple interest exceed a future value calculated with compound interest at the same rate?

• A)the interest rate is very high.
• B)the investment period is very long.
• C)the compounding is annually.
• D)this is not possible with positive interest rates.

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Definitions:

Import Quota

A restriction set by a government on the quantity of a certain good that can be imported into the country.

Welfare Outcomes

The effects of policies or economic conditions on the well-being and quality of life of individuals or populations.

Equivalent Tariff

A tariff level that would give the same protective effect to the domestic producers as a given non-tariff barrier does.

Yacht Industry

The sector of the economy that is involved in the design, construction, and sale of yachts, ranging from luxury to small racing models.