You Are Better Off Choosing $400 in 4 Years Rather

question 124

Multiple Choice

You are better off choosing $400 in 4 years rather than $300 today if the interest rate is

• A)lower than about 5.5 percent.
• B)higher than about 5.5 percent.
• C)lower than about 7.5 percent.
• D)higher than about 7.5 percent.

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Definitions:

Real GDP

The measure of the value of economic output adjusted for price changes (inflation or deflation).

GDP Deflator

An economic metric that converts the money-value measure of GDP from current prices to constant prices, enabling comparison of economic productivity and real growth over specific periods.

GDP Deflator

An economic metric that converts the money-value measure of GDP to an index for quantity comparison.

Nominal GDP

The total economic value of all finished products and services generated inside a country over a year, evaluated at present market prices.