A Wealthy Relative Promises to Give You $5000 When You

question 115

Multiple Choice

A wealthy relative promises to give you $5000 when you complete all of the college courses needed to earn a degree in business. What must the present value of this future sum be?

• A) It must be less than $5000, but the exact value depends on how long it takes you to earn your degree and the rate of interest you can earn on investments.
• B) It must be less than $5000, but the exact value depends on how long it takes you to earn your degree and the exchange rate for the dollar.
• C) It must be more than $5000, but the exact value depends on the exchange rate for the dollar and the rate of interest you could earn on investments.
• D) It must be more than $5000, but the exact value depends on how long it takes you to earn your degree and the rate of interest you can earn on investments.

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Definitions:

Unattainable Combination

A scenario in the context of production possibility frontiers where the desired production of goods exceeds the resources available, making it impossible to achieve.

Current Economic Situation

A description of the state of the economy at a specific point in time, including aspects like employment levels, inflation rates, and GDP growth.

Point A

Typically used in graphical analysis to denote a specific point or position within a chart or graph.

Economic Capacity

The maximum output that an economy can produce without big increases in inflation, utilizing fully its resources.