If the Interest Rate Is Zero, a Promise to Receive

question 78

Multiple Choice

If the interest rate is zero, a promise to receive a $100 payment one year from now is:

• A) more valuable than receiving $100 today.
• B) less valuable than receiving $100 today.
• C) equal in value to receiving $100 today.
• D) equal in value to receiving $101 today.

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Definitions:

Frugal Heuristics

Cognitive shortcuts or rules of thumb that simplify decision making.

Effective Decision Making

The process of making choices by identifying a decision, gathering information, and assessing alternative resolutions to achieve a goal.

Thoughtful Deliberation

A process of carefully considering and reflecting on various options or aspects of a situation before making a decision.

Alternatives

Alternatives refer to other options or choices available in a given situation.