If the Price Level Increases

question 151

Multiple Choice

If the price level increases,

• A)the buying power of your checking account falls.
• B)the buying power of your checking accounts rises with it.
• C)there is no effect on buying power.
• D)the economy tends to grow faster.

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Definitions:

Maturity Value

The total amount payable to an investor at the end of a fixed-term investment, including the principal and the interest.

Strip Bond

A fixed-income security that is created by separating the principal and interest payments of a longer-term bond, selling them as individual zero-coupon bonds.

Yield Rate

Yield rate represents the earnings generated and realized on an investment over a particular period, expressed as a percentage.

Compounded Semi-annually

Pertains to the process of adding interest to the principal sum of a loan or deposit on a twice-yearly basis, allowing the interest to also earn interest at these intervals.