If an Investment of $400 Increases to $800 in 16

question 35

Multiple Choice

If an investment of $400 increases to $800 in 16 years, the annual interest rate of the investment must be _____.

• A)18 %
• B)10 %
• C)9 %
• D)4.5 %
• E)1.8 %

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Definitions:

Price Level

A metric that represents the median of present prices for all types of goods and services in the economy.

Future Expectations

The anticipations or outlook that consumers and businesses have about economic conditions that affect their spending and investment decisions.

Deferring Consumption

The act of postponing spending money on consumption goods to save or invest for future use.

Interest

The cost of borrowing money, usually expressed as a percentage of the amount borrowed, paid over a specific period.