Suppose You Win a Small Lottery and You Are Given

question 65

Multiple Choice

Suppose you win a small lottery and you are given the following choice: You can receive (1) an immediate payment of $5,000 or (2) two annual payments, each in the amount of $2,700, with the first payment coming one year from now, and the second payment coming two years from now. You would choose to take the two annual payments if the interest rate is

• A)2 percent, but not if the interest rate is 3 percent.
• B)3 percent, but not if the interest rate is 4 percent.
• C)4 percent, but not if the interest rate is 5 percent.
• D)5 percent, but not if the interest rate is 6 percent.

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Definitions:

Net Exports

The value of a country's total exports minus the value of its total imports, representing a component of a nation's GDP.

Short Run

A period in which at least one input is fixed, limiting the ability of a firm to adjust all of its inputs to change output.

Unemployment

A situation where individuals who are capable of working and are actively seeking work are unable to find employment.

Inflation

A universal hike in costs and decline in the monetary value.